Banks are slow to increase rates on savings accounts, but quick to reduce them • Hacker News Board

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

#131

Post by mey » Sat, Jul 25, 2020, 5:26 PM UTC

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…

That's fine, I use a credit card like a charge card, have my credit union as my check clearing house with minimal operating funds, and float the rest where I can get good rates. I can shop around the credit card and savings accounts at any time.

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

#132

Post by comicjk » Sat, Jul 25, 2020, 5:27 PM UTC

wolco wrote: post #70

comicjk wrote: post #61

Earlier quoted context omitted.

This makes sense when you think about the inelastic demand for gas and the physical problem of storing it. The availability of storage makes gas prices change slowly most of the time. But, if there's a chance of the tanks running dry, prices go sharply up. And if there's a chance of the tanks running out of space, prices go sharply down.

In those cases they shouldn't go up immediately only during refilling an order.

Not the individual gas stations; I mean the storage capacity of the whole system.

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

#133

Post by dhosek » Sat, Jul 25, 2020, 5:30 PM UTC

My credit union is really good about tracking rates against the greater market. But I only qualified for membership because I taught community college in Orange County, California for two semesters as an adjunct. I live in Chicago now and I have no intention of giving up my account with that credit union.

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

#134

Post by jacquesm » Sat, Jul 25, 2020, 5:35 PM UTC

jon-wood wrote: post #43

jacquesm wrote: post #33

Earlier quoted context omitted.

> 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.

How can a product have > 100% margin? Were you getting paid by the supplier to stock their products?

You are right, I should have used markup, not margin. Apologies.

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

#135

Post by gpanders » Sat, Jul 25, 2020, 5:38 PM UTC

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…

> savings accounts are a terrible, terrible way to invest your money. If you have money in a savings account for the purpose of earning interest, you're doing it wrong.

Agreed.

> And really, interest on savings accounts shouldn't register for anyone looking for a bank account

Disagreed. Emergency funds/long-term cash deposits are a real and valuable thing, and while it's true that any money in a savings account loses value to inflation, you'd be crazy to not try to minimize the gap between your interest rate and inflation as much as possible. The difference between a 0.1% interest rate at Chase (or whatever) and ~2% at Ally is huge (I realize no one has 2% interest rates anymore, but those numbers were both roughly accurate before Covid).

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

#136

Post by hansvm » Sat, Jul 25, 2020, 5:40 PM UTC

sjg007 wrote: post #119

jliptzin wrote: post #77

Earlier quoted context omitted.

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.

Frozen foods have a limited shelf life too.

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

#137

Post by formercoder » Sat, Jul 25, 2020, 5:41 PM UTC

NovemberWhiskey wrote: post #60

formercoder wrote: post #40

Earlier quoted context omitted.

I’m not aware of anything with that risk / liquidity profile which pays better? In fact theoretically there shouldn’t be anything.

Well, that sort of depends on how you value FDIC insurance.

Not any higher than SIPC

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

#138

Post by thrwn_frthr_awy » Sat, Jul 25, 2020, 5:44 PM UTC

This is why the stock market is still going up. There is no where else to put your money. We need better 1-3% returns for savings and 401ks outside of equities. Where are people supposed to put their money these days?

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

#139

Post by basch » Sat, Jul 25, 2020, 5:45 PM UTC

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.

It's also basically as easy to stick with your current institution and put cash into ICSH (https://www.ishares.com/us/products/258806/ishares-liquidity...) or if youre worried about inflation TIP/SCHP (https://www.blackrock.com/us/individual/products/239467/isha... https://www.schwabfunds.com/products/schp)

It has the benefit of working anywhere, without switching banks, and the time to liquidate and get it back into your checking account will be 2 days, similar to moving money between institutions. The benefit being the entire transaction happens within the purview and responsibility of one customer service organization.

It's not quite cash and interest, but in effect its going to be basically the same thing.

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

#140

Post by rmrfstar » Sat, Jul 25, 2020, 5:48 PM UTC

matthewdgreen wrote: post #127

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…

There are services (google Max my Interest, this is not a product plug) that will allow you to automatically shuffle money between many high-yield online savings accounts. They'll make sure that your money stays in the highest-yielding account, but remains under the FDIC insurance limits.

For the lazy there are prime money market funds.

In this panic and the '08 panic, the Treasury/Fed stepped in to protect prime funds.

It's not fair to people who buy government funds, or jump through hoops to spread cash across banks. But that's what they do.