If you have a savings account with Ally, keep an eye on your next statement. Chances are, the rate the online bank pays you has slipped recently.
Late last month, some Ally customers received a notice pointing out that “interest rates are on the downswing and projected to fall further,” and that the downward trajectory was likely to impact “all kinds of things, from mortgages to CDs to savings accounts.”
True to its word, Ally announced that the rate on its popular Online Savings Account would dip from 2.2% to 2.1%.
According to a recent Money magazine report, rates also have started to fall at Marcus, Goldman Sachs’ online bank.
So, what accounts for this sudden U-turn? According to Money:
“The answer has to do with the Federal Reserve, which said earlier this year that it would be unlikely to raise rates further in 2019, and may in fact soon cut them.”
Rates on savings accounts have been rising in recent years in tandem with a series of decisions by the Federal Reserve to hike its benchmark federal funds rate.
The Fed last hiked that rate in December. It was the fourth hike of 2018 and marked the first time since 2008 that the Fed raised rates that many times in one year.
Now, the mere anticipation that the Fed will reverse course and beginning cutting the federal funds rate has banks jumping ahead of the curve and cutting savings account rates.
What should you do now?
For more than a decade — beginning with the Great Recession — savings account rates languished near zero. Many savers celebrated when savings account rates finally began climbing over the past couple of years.
But that particular party appears to be over now — at least at some banks. So, if your bank is not paying the rate you would like, it’s time to search for an institution that will.
As with so many things, comparison shopping will yield the best deal for you.
There are savings accounts that currently pay more than Ally’s 2.1% or Marcus’ 2.15%. For example, CIT Bank’s Savings Builder account pays 2.3%.
For more options, check out our savings account comparison tool.
If you find a better rate, don’t hesitate to make the switch. We’ve got tips for doing so in “How to Switch Banks in 5 Steps.”
Have you found a great savings account rate? Tell us how you did it in comments below or on our Facebook page.
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