Best Savings Rate Now at 1.25% APY

Savings account rates continue to move higher this month as several banks have increased their savings rates. We also have a new best rate in our variable rate database. My Savings Direct's savings rates are now at 1.24 percent with an APY of 1.25 percent.

For the first time in several years, the highest savings rate in our database now matches the highest 1 year CD rates available. Prior to My Savings Direct's increase, the top savings rates were about 10 to 15 basis points below the top 1 year CD rate.

You now can get the same rate with a variable rate account without committing to locking into a rate for a year. Why should this matter? Because deposit rates are moving higher over the next couple of months once the federal funds rate is increased.

The first increase is expected to be in September and will probably be a 0.25 percent increase. This should send the highest deposit rates up by the same amount. We could see savings rates and 1 year CD rates around 1.50 percent in a matter of months.

Other banks that increased their rates the past month include The Palladian Private Bank, which now is offering a rate of 1.10 percent. Synchrony Bank increased their rate to 1.05 percent. Ally Bank's rate is was increased to 0.99 percent. Banks have been more willing to increase savings rates but the top money market rates haven't been increased the past month.