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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

#151

Post by PaulDavisThe1st »

salawat wrote: post #95
amiga_500 wrote: post #81

Earlier quoted context omitted.

Sorry I'm not American so I'm not obsessed with the idea that the state cannot maintain something. Your banking sector sucks compared to Europe.

That's absolutely fair, and I admit, I wouldn't be fundamentally opposed to it. The little magic 8-ball in my mind I use to gauge the plausibility of a particular political direction of development simply sees far too many endemic issues with American institutional philosophy to see something like this gain traction. Mind, I've worked in that space. It's a ridiculously profitable industry for those that operate in th…

You've been told you can't trust the government for almost 40 years now. What evidence do you actually have that the government is any less "trustworthy" than large corporations? Or more wasteful? Or less efficient?

There are endless stories of government boondoggles ... precisley because the government is public. Dig a little deeper and all the same stories of organizational dysfunction exist in corporations large and small - even in some co-ops, sad to say.

Don't just buy into the relentless right-wing propaganda that government is broken/inefficient/useless/corrupt. Seek out actual evidence. Recognize that all human organizations have issues and that once (say, the 1960s) we used to believe (and devote significant resources to the idea) that we could improve them. Government is no exception to that, any more than Verizon or REI.

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

#152

Post by ohmybash »

Banks exist to make money. I don't understand how this is surprising to anyone. Downvote me all you want, but it's mind-boggling that a private message board for startups is also full of surprised Pikachu faces any time a company tries to turn a profit.

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

#153

Post by PaulDavisThe1st »

Another (small) dimension to this: my brother-in-law works for an organization that acts as a thinktank for many/most(all?) credit unions in the US. When we moved to Santa Fe last year, I noted that the credit union I wanted to join (yay! credit unions!) offered an insanely low interest rate for their savings account. So I asked my BiL whether I should feel guilty about using an online "high rate" savings account instead.

He told me that if a CU is offering a very low rate, it essentially means that they don't have much significant lending going on. He said that if things changed, and they start to see real growth in the demand for capital loans, their savings interest rate will pick up. He said I should not worry about it.

Now, this doesn't really address the Fed rate vs. the savings interest rate gap (surely the CU could at least pay something near the Fed rate), but it did expand my understanding of the situation for credit unions, at least.

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

#154

Post by [deleted] »

PaulDavisThe1st wrote: post #151
salawat wrote: post #95

Earlier quoted context omitted.

That's absolutely fair, and I admit, I wouldn't be fundamentally opposed to it. The little magic 8-ball in my mind I use to gauge the plausibility of a particular political direction of development simply sees far too many endemic issues with American institutional philosophy to see something like this gain traction. Mind, I've worked in that space. It's a ridiculously profitable industry for those that operate in th…

You've been told you can't trust the government for almost 40 years now. What evidence do you actually have that the government is any less "trustworthy" than large corporations? Or more wasteful? Or less efficient? There are endless stories of government boondoggles ... precisley because the government is public . Dig a little deeper and all the same stories of organizational dysfunction exist in corporations large…

[deleted]

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

#155

Post by mapgrep »

save_ferris wrote: post #2

This 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…

It may be typical but it is a useful counterpoint to the idea that markets are efficient for consumers. If markets “worked” as so much propaganda insists they do, banks would rush to increase interest rates, and gas stations to cut prices, when market conditions allow in order to better attract customers. In reality market inefficiencies allow predatory behavior (it takes time for consumers to notice interest rate changes; gas stations can practice soft informal forms of collusion). Free market and anti regulation advocates like to deny or avoid discussing this.

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

#156

Post by amiga_500 »

sukilot wrote: post #104
amiga_500 wrote: post #81

Earlier quoted context omitted.

Sorry I'm not American so I'm not obsessed with the idea that the state cannot maintain something. Your banking sector sucks compared to Europe.

But we avoided the Holocaust so far, so we've got that going for us.

Huge congratulations on that, it's good to set standards. Perhaps you might consider making them a bit higher?

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

#157

Post by patmorgan23 »

salawat wrote: post #64
amiga_500 wrote: post #53

Earlier quoted context omitted.

We should each have our own account number that is ours. This could be registered with the state, when born. It would contain a pointer to a private bank account. Banks would have to implement a one day transfer to flip the pointer.

Who is maintaining the ledger exactly? On what terms? Who has access to that account? What controls are they entitled to place on it? Is it maintained by the government? If yes, then you have a whole new set of problems. Now you have all your funds in one basket. (Remember, you've implemented the indirection mechanism, so it doesn't matter which bank you do business with, it's this weird government one all the time).…

The ACH system is run by the Fed(read us gov) already

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

#159

Post by mrep »

mschuster91 wrote: post #130
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%.

> Only real friction is I can only move $10k at a time every N (4?) days. The amount of bullshit that you Americans put up with in banking on a daily basis is mindboggling for me as an European. A bank that couldn't give me all my funds in one day would never see my business again and yield themselves a complaint at the regulatory agency.

Some questions from an American:

Are transfers that take like a day or two that inconveniencing cause instantaneous transfers would only benefit me in getting a tiny bit more interest for that extra day or two i could get interest on it? With how low interest rates are these days, that basically makes it useless for me.

If your money goes to the wrong routing or account number, can they fix that (literally happened to me where money got sent to the wrong routing number and I went to a chase branch and explained what happened and they fixed it)?

What other bullshit do you perceive we have? Granted, I only use my bank for my automatic income direct deposits, my auto loan which automatically gets pulled from my checking account, automatically paying my rent, automatically paying off all of my credit cards in full, and very occasionally using an atm to pull money out of my checking account. That's it and i literally don't use a bank for anything else which could explain some of the disparity as I've read you guys actually use your bank more often as you guys use cash and debit cards a lot more. I check it just a few times a month to see what the balance is and then occasionally siphon off any income surpluses to vanguard who holds all of my savings and investments and they are awesome.

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

#160

Post by thekyle »

sithlord wrote: post #86
aronpye wrote: post #67

Why would you ever have a savings account? They’re pointless as they always earn little interest. Much better to invest in an ETF that tracks something like the S&P500 with an average year on year growth of 10%, or if that is too risky invest in a government bond.

Because it makes since to keep an emergency fund, even a small amount, say 10-15k, will earn 125-150 (obviously more or less depending on rate) in a savings account is better than roughly 0 in a checking account.

What I do is use credit cards to cover emergency expenses and then sell some of my bond ETFs to pay the loan after a few days.

That way I get to earn 2/3% interest and have liquid access to my money.

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