7 Banks Offering Variable Deposit Rates at 1.10% or Above

As we near the first federal funds rate increase in nearly a decade, we find 7 banks in our database offering variable deposit rates at or above 1.10% APY. We may see more banks increase their rate to 1.10 percent or above if the Fed increases the fed funds rate.

An increase is looking more and more likely. In fact, the CME Group's FedWatch Tool currently has the probability of a rate increase at 85.3 percent. Last month the probability of a rate hike in December was much lower at 69.8 percent.

Not only is it likely more banks and credit unions will increase rates to 1.10 or higher, some banks with the highest rates now might increase their rates even more. We could see the top savings rates and money market rates at 1.35 percent or possibly as high as 1.50 percent in the coming weeks.

Besides a hike, everyone will be paying close attention to the Fed's comments on future hikes. If the Fed's remarks are dovish, it could be many more months before we see more increases. Any future hikes will be dependent on future economic data.

Strong growth, employment, and inflation near the Fed's target of 2.00 percent will bring more rate increases. After the December meeting, the Fed meets again in both January and March, followed by 6 more meetings in 2016. If the Fed were to increase the rate during each meeting, the fed funds rate would be around 2.50 percent by the end of 2016.

The fed funds rate at 2.50 percent will send the best savings rates and money market rates above 3.50 percent, possibly as high as 4.00 percent. The last time variable deposit rates were that high was about 7 years ago during the beginning of the financial crisis.