Banks are slow to increase rates on savings accounts, but quick to reduce them
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Banks are slow to increase rates on savings accounts, but quick to reduce them
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Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#2This seems like pretty typical market behavior to me. Are we really surprised that banks are taking the opportunity to increase their profits by choosing not to pass down all savings to customers?
The same exact thing happens with gas stations. The price of gas never falls quite as fast or far for the consumer as it does for the retailer, but gas stations will instantly respond to price increases. I’m sure there are dozens of other examples of this.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#3But nobody is expecting to be earning a significant return from a retail bank account, are they?
I think if you're disappointed by your checking-account interest rate you probably first need to think about why you're storing your money there.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#4Online only banks offer great rates on savings accounts. The Fed has an influence but these rates are market driven. If you want high rates, look for them and put your money there. Many financial products are only available to the wealthy but in this case anyone can do this.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#5patio11 tweeted about banks and their opaque conduct re. interest on savings accounts in the past couple of months:
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#6Online only banks offer great rates on savings accounts. The Fed has an influence but these rates are market driven. If you want high rates, look for them and put your money there. Many financial products are only available to the wealthy but in this case anyone can do this.
Online only banks have fewer expenses (no branches or staff in them). This appears to translate into higher rates which is a selling point for them.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#7Online only banks offer great rates on savings accounts. The Fed has an influence but these rates are market driven. If you want high rates, look for them and put your money there. Many financial products are only available to the wealthy but in this case anyone can do this.
Savings account rates are terrible compared with alternative investments though, even cash-storage investments.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#8But nobody is expecting to be earning a significant return from a retail bank account, are they? I think if you're disappointed by your checking-account interest rate you probably first need to think about why you're storing your money there.
Personally I couldn’t care less about the interest rates on my bank accounts. The money I have there is money that I intend to use the coming years, e.g. for reoccurring expenses or for expenses related to my house. Any money that I don’t intend to use the coming ~5 years I place into index funds.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#9But nobody is expecting to be earning a significant return from a retail bank account, are they? I think if you're disappointed by your checking-account interest rate you probably first need to think about why you're storing your money there.
There are a lot more people than you think that simply don't invest their money, instead they keep it in savings accounts. My aunt is one of those people. She got a large inheritance and basically kept it in a savings account for 20 years. My mom got the same inheritance and bought investment properties with it and now its worth 10x. I think it comes down to the fact that a lot of people are risk averse or feel that investments are too complicated for them.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#10But nobody is expecting to be earning a significant return from a retail bank account, are they? I think if you're disappointed by your checking-account interest rate you probably first need to think about why you're storing your money there.
When interest rates are higher you can get a decent return. I remember getting some decent rates from banks in early 2000s. Not amazing but maybe like 4 to 5%, IIRC
edit: I was able to find 4% savings account from Wamu and 5% cd.