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Banks are slow to increase rates on savings accounts, but quick to reduce them

jpkoning.blogspot.com

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Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#111

Post by deegles »

ac29 wrote: post #101
mabbo wrote: post #24

The 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…

Opening a online, high-yield savings account takes much less than 15 minutes. Many of these banks dont even offer checking accounts, so you couldn't switch everything else over even if you wanted to. Many people in the US have no problem opening and using multiple credit cards, so having multiple bank accounts shouldn't be too difficult.

You don't earn interest on your money while it's in transit (seems to be around 1-2 days). If you're constantly shuffling money around, it might not make sense unless the rates are significantly higher. You'd have to do the math. Here's a calculator I found: https://www.mymoneyblog.com/the-ultimate-interest-rate-chase...

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#112

Post by peacefulhat »

mabbo wrote: post #24

The 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…

It’s a cartel. Good luck with a consumer-driven fix.

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#113

Post by dsr_ »

cm2187 wrote: post #51
tssva wrote: post #36

Earlier quoted context omitted.

The article isn't about loan interest rates but the interest rate banks offer on deposits.

Where do you think the bank gets the money for paying interest on deposits from?

They have sofas in their lobby, and they look under the cushions.

I just checked. US Bank's basic savings account offer 0.01% APY and costs $4/month.

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#114

Post by aleksandrm »

BurningFrog wrote: post #102
latortuga wrote: post #66

Earlier quoted context omitted.

This is true, but there's nothing that prevents you from having a second bank for savings only. This is what I've always done, open a savings account at whatever bank has the best rates, typically an online-only bank. Savings is useful for liquidity in an emergency and I'd be crazy to not try to get a few points on it in exchange for a few clicks.

Yeah, I moved my savings from the Setting it up was as hard as making a HN account. I can transfer money CB -> Ally with a few clicks. Only real friction is I can only move $10k at a time every N (4?) days. Before you get too excited, the Ally rate is now down to 1.1%.

Is it a Citibank limit that you only move 10k every N days? I changed banks to Ally last year and had no such issue.

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#116

Post by dangerboysteve »

thaumasiotes wrote: post #110
mabbo wrote: post #24

The 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…

> So what banks are actually competing over is the people who happen to be shopping around for a new bank- something most people do only a handful of times in their life. It's worse than that. I shopped around for a new bank based on my needs -- I picked Capital One specifically because of their advertised "no foreign transaction fees". [In fact, there's a fee around 1%, it's just not called a "foreign transaction fe…

I wonder if most people start out banking based on where their parents bank? And most only switch when there is an event which make them unhappy with the bank.

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#117

Post by ac29 »

lotsofpulp wrote: post #91
jennyyang wrote: post #88

This is the same with gasoline prices too. CA gas prices are still well over $3/gallon despite low crude prices.

That’s just how much refining fuel costs. There is no monopoly of fuel suppliers holding the gas price up, and gas stations make very little money selling gas itself.

Refining isnt actually all that expensive. At least in California, taxes are a higher percentage of total price (18.4c federal + 35c state, per gallon).

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#118

Post by perl4ever »

readams wrote: post #50
stagger87 wrote: post #37

Earlier quoted context omitted.

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.

Leverage. Let's say the inheritance was 50k. You make that a 10% down payment on a 500k house. Assume rent covers your interest on the loan, taxes, etc. 10 years later the house appreciates 100% to 1M. You sell the house. You just made 500k from 50k.

Did you mean "etc" to include maintenance, principle payments, and transaction costs?

It doesn't sound like you're describing the magic of leverage, but the magic of having an arbitrary amount of cashflow.

Makes me think of https://en.wikipedia.org/wiki/Robert_Kiyosaki and https://en.wikipedia.org/wiki/Trump_University

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#119

Post by sjg007 »

jliptzin wrote: post #77
jacquesm wrote: post #26

Same 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.

Suppliers for lots of things charge whatever people will pay regardless of current market conditions. From time to time I read about lobster surpluses, where prices for distributors plummet and they just can't get rid of them. But when I go to the supermarket the price hasn't budged even $1. The supermarket knows the average consumer isn't aware of the fluctuations in the wholesale lobster market and even if they are…

Lobsters can be frozen.. gasoline is more elastic b/c it does eventually expire.

Re: Banks are slow to increase rates on savings accounts, but quick to reduce them

#120

Post by idunno246 »

aleksandrm wrote: post #114
BurningFrog wrote: post #102

Earlier quoted context omitted.

Yeah, I moved my savings from the Setting it up was as hard as making a HN account. I can transfer money CB -> Ally with a few clicks. Only real friction is I can only move $10k at a time every N (4?) days. Before you get too excited, the Ally rate is now down to 1.1%.

Is it a Citibank limit that you only move 10k every N days? I changed banks to Ally last year and had no such issue.

Yea, specifically with Citibank’s external transfers interface. You can write yourself a check for the full amount, but then you’re limited by ally’s edeposit limit or mailing it. Or if ally can do an ach pull that’d work too.
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