Ally bank (an online bank) has very competitive savings rates and great online banking/support.
Banks are slow to increase rates on savings accounts, but quick to reduce them
31–40 of 180 posts
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#32Same with fuel prices. War in the middle East? Gas prices jump up overnight. Slump or excess? Consumer prices drop ridiculously slow. Middle men will always use any excuse to extract more from both sides.
I guess that’s true in most cases, a lot of people seem to be saying it, but a few months ago we had gas cheaper than $1 per gallon quite suddenly.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#33Same goes for gas prices. I heard an earnings call recently for a public company that runs a ton of gas stations. They indicated that their margins on gasoline have gone far far up and offsetted and losses of sales of drink/snacks etc in their stores, because they are quick to raise gas prices when oil prices go up, but very slow to do so when prices go down. The amount of fascinating economic lessons we've gotten ov…
> losses of sales of drink/snacks etc in their stores
As a former gas station owner, let me correct you here. Drinks and snacks, no matter how low the volume have crazy margins, sometimes 100% or more and make up a large fraction of gas station profits. It isn't rare to run the fuel at a loss to sell more ice cream and drinks.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#34Same goes for gas prices. I heard an earnings call recently for a public company that runs a ton of gas stations. They indicated that their margins on gasoline have gone far far up and offsetted and losses of sales of drink/snacks etc in their stores, because they are quick to raise gas prices when oil prices go up, but very slow to do so when prices go down. The amount of fascinating economic lessons we've gotten ov…
I was just talking to a friend about that - a lot of 3D printers are sold out. Good webcams are gone. Cheap intex vinyl pools are gone or selling for 5-10x their original price. It really is astounding how quickly things shifted.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#35If you can borrow from your central bank for nothing, why would pay depositors anything? They're not just competing with free, they're unreliable and expensive to manage.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#36I am happy to be contradicted by better specialists than me of US banks. But aren’t the vast majority of loans in the US fixed rate with no or little prepayment penalties? If that’s the case the interest rate risk of these banks is not trivial and certainly not a simple pass-through of overnight rates.
The article isn't about loan interest rates but the interest rate banks offer on deposits.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#37But 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…
10x? I'm not familiar with real estate. How does one earn 10x in that time frame. Even with a price to rent ratio of 1 to 15 and assuming housing prices double over that period, you still aren't at 10x, and that doesn't include maintenance, taxes, closing fees, etc.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#38The problem is that most people don't want to change banks. If changing your bank to get a better savings rate took 15 minutes and had no other consequences, banks would be updating their rates by the second to beat one another. But it doesn't. If your mortgage, credit cards, car loan, etc, are all with the same bank then switching your bank account only just to get 0.1% higher interest is a huge hassle for little be…
And your typical mortgage contract will include clauses that stop you from moving your mortgage to some other provider without penalty. You can get badly locked in like that with rates from a decade ago.
AFAIK only PMI can have prepayment penalties. You’ll still have to pay closing costs on and qualify for a new mortgage.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#39This 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…
I heard this story / explanation before: You own a gas station and you want to fill up your tanks so you call the distributor and pay $1 / gallon. You then sell that for $1.10 / gallon making a 10% profit. Now prices of crude doubles and you have 1000 gallons left to sell. It’s going to cost you $2 / gal to refill so you immediately raise your price to prevent a loss and cover the next fill. I don’t know how accurate…
Oh ... interesting take. But how did they order the first tanker? Surely there has to be credit involved in most cases.
Re: Banks are slow to increase rates on savings accounts, but quick to reduce them
#40Online 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.
I’m not aware of anything with that risk / liquidity profile which pays better? In fact theoretically there shouldn’t be anything.