Washington - Rising interest
rates haven't offered much relief for savers, but that's starting to change. The Federal Reserve raised
its benchmark interest rate by 0.25 percentage points making it the
fourth rate hike since December 2015.
Those rate hikes have had a
more immediate effect on what borrowers pay for credit cards, home equity lines
and other loans. But over the past couple of months, some online banks have
passed those rates along to consumers by raising the yield on savings accounts.
"They're finally
getting to the point where, if you shop around, you can get some decent savings
rates," says Robert Frick, a corporate economist with Navy Federal Credit
Union.
Some online banks are
offering savings yields as high as 1.3 percent on accounts that are available
nationwide, up from a high of 1.1 percent at the start of the year, according
to Bankrate.com. Meanwhile, the average yield offered by traditional savings
accounts has remained pretty much unchanged at 0.09 percent.
Online banks have typically
offered some of the most attractive deals for savers because they don't have to
pay for overhead business costs. But the banks have been sweetening their
savings accounts as the Fed has raised rates as a way to attract more cash the
firms can use to issue more loans, says Greg McBride, chief financial analyst
for Bankrate.
BankPurely, DollarSavingsDirect
and ableBanking were all offering annual percentage yields of 1.3 percent on
savings accounts as of Wednesday, the highest yield available, according to
Bankrate. Goldman Sachs offered the next highest yield of 1.2 percent, followed
by Synchrony Bank, which offered a yield of 1.15 percent. Some of the banks
have been offering these yields for several months, but others, such as Goldman
Sachs, have upped their yields in the past couple of weeks.
Read also: What's your bank doing to keep you safe?
Consumers still may not
notice much of a change in the yields offered by most traditional savings
accounts, analysts say. Big banks have generally been swimming in cash since
the Great Recession and don't feel pressure to bring in more deposits, says Ken
Tumin, creator of DepositAccounts.com, a website that compares bank accounts.
People thinking about
opening an online savings account should make sure they understand the ins and
outs of the accounts, including any fees they may be charged. Some of the banks
may set limits on how much money consumers can transfer out of the accounts
each day, Tumin says. Other banks may require a minimum amount of deposits.
Consumers who may need
immediate access to their savings should look for online savings accounts that
offer debit cards or ATM access, Tumin says. Otherwise, it could take between
one and four days for money to be transferred from an online savings account to
your checking account, he says.