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NerdWallet Interest Rate Monitor: Deposit Accounts that Beat Inflation – January 2013

by on January 16, 2013

Inflation causes the purchasing power of a dollar to decrease over time. As such, it especially hurts consumers who are trying to save money or who are living off of fixed incomes (such as pensioners, social security beneficiaries, etc.) — without a competitive interest rate to offset inflation, money allocated as savings will, over time, lose value in real terms.

NerdWallet scanned the banking landscape to find the most competitive interest rates such that consumers and savers can end up in a “net-positive” situation.

NerdWallet’s Interest Rate Monitor – January 2013

Latest CPI Release: January 16, 2013 (for December 2012 statistics)

12-Month Inflation Rate: 1.70%


December year-over-year inflation marks a 0.10% decrease from the November statistic, as reported last month. This marks the second straight monthly decline in inflation levels, which might be more hopeful to savers if interest rates were not also doing the same. This month, our survey of savings and CD accounts at thousands of banks and credit unions resulted in 518 accounts beating the current inflation rate (double the number identified last month).

  • All but 2 of these were certificates of deposit
  • 399 (77%) were credit union products
  • 415 (80%) of CDs were for 5-year terms or longer, meaning savers must sock away excess cash for an extended amount of time to access the best yields

It is important to know the differences between different types of deposit accounts. If liquidity is a primary concern, you would be best served by a savings or checking account with the highest rate available. In this interest rate environment, savings accounts and even online checking accounts can be nearly as competitive as a short-term CD, but without the same withdrawal restrictions.

Select deposit accounts that beat inflation:

Checking and Savings Accounts

Type Institution State APY Max*
 Checking Citizens FCU  TX 2.25%  $25,000
 Savings Genuine Parts CU GA 2.02% $75,000

*Interest may still be paid for amounts above the maximum, but at lower rates.

Time-Deposits (CDs)

Term Institution State APY Min
 5 years Main Street Financial FCU  LA 2.25%  $10,000
58 month special Superior Choice CU MN, WI 2.08% $10,000
 4 years Mobiloil FCU TX  1.92% $1,000
 2 years Gulf Coast FCU TX  1.85% $500
 5 years People’s State Bank IA, WI 1.76% $500

Some institutions may have membership eligibility restrictions. For a comprehensive list of deposit rates, refer to NerdWallet’s rates tool that lets you search for the best interest rates rates across over 7,000 banks and credit unions.

The importance of finding the right deposit account

Consider a consumer with $20,000. At various yields, the inflation-adjusted value of the deposit after just one year (assuming constant inflation) is drastically different.

Action Yield Inflationary Effect Net Effect* Net Gain/Loss
1) None 0% -1.70% -1.70% -$334
2) Deposit in a Big Bank Savings Account .01% -1.70% -1.79% -$332
3) Invest in the Highest Rate CD Identified 2.58% -1.70% +1.18% +$173

*Net effect = (1+yield)/(1+inflation)


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