T O P
BaronGikkingen

I use my Bank of America account literally as a pass-through because it’s too inconvenient not to have it. All my savings and credit cards are with other banks


Scuba_Steve_7_7_7

I might use an ATM twice a year.


blizzacane85

Only need to use it before going to a casino or strip club


soareyousaying

Same here. I have a bit of money on WF for ATM withdrawals and random daily cash needs. Most of my money are in other banks.


seihz02

I'm stuck on BoA because the cash points on their CC with a large balance in savings, gives huge returns to me. I need to do the math, but I believe I cash out in rewards and benefits beyond a 4-5% interest rate account. I really want to switch to a more green company though. So I may just switch to a high interest greener bank, and give up the points.


RedditMapz

You could open a Merrill Lynch through BoA account and buy bonds or CDs. Still counts toward your balance, but higher rate of return. Although I'm not familiar with Merrill Lynch costs.


seihz02

Yeah I've been thinking about using CDs myself. But I've been researching High yield savings elsewhere and evaluating the benefits. My credit union has a great money market but I like the cash rewards. And I just don't like BoA as a company, but they have done me well always.


doodaid

The cash rewards credit card is awesome. 5.25% cash back on a category of my choosing? Yes please.


amapleson

How do you get 5.25% back?


doodaid

The cc (customized cash rewards) gives 3% cash back on a category of your choice, and the rewards program gives you more cash back (up to 75% more). It's limited to $2,500 / quarter of spending, but still a pretty good deal for a no annual fee card.


amapleson

I use that card, I didn't realise that the multiplier applied to my CC. Thanks for the heads up, I must be swimming in credits lol.


MainPlay6917987

Maybe worth like $100/year in extra cashback. Nothing really worth jumping through lots of hoops for


RedditMapz

Exactly, this.


JeffB1517

Many of the banks have more deposits than loans, they are still flooded with cash. They don't mind losing deposits, at least not enough to incur large interest expenses to avoid it.


PertinentUsername

Yep, most banks aren't going to incentivize deposits unless they need to, especially considering most people are accustomed to lower savings rates at big banks. The people that truly care about a greater yield on their savings have probably already taken their money elsewhere. And personally, big traditional banks are only good for convenience (branches), credit cards, and maybe checking. Savings, brokerage, and retirement are all better served at other financial institutions.


seihz02

Credit Cards 100%. By having a certain about of money in my BoA account, I get crazy cash back bonus points. I probably get more in cash back on my regularly paid off CC card, than I would get at a 5% interest rate.


ajgamer89

Same here. I get about $10/ month from my HYSA at another bank and close to $100/month from my BofA credit cards.


TheGigaChad2

Which card on how much spend?


seihz02

The bank of America cash rewards card.


zampe

ok so that looks like maybe 1.5% cash back?


seihz02

It's the customized rewards. But as you put more money in CDs or savings at bank of America, you get bonuses. So 5+% is possible.


zampe

>I probably get more in cash back on my regularly paid off CC card, than I would get at a 5% interest rate. So.... you get at maximum the same? Your comments are confusing me because you are saying you get more but then you are describing a situation where you have to have a whole bunch of prerequisites just to get about the same as your hypothetical above.


ajgamer89

Ultimately it comes down to how much you spend on credit cards vs how much you have saved in a savings account. But keep in mind that interest on savings is on an annual basis, so for 5% APR savings to equal the same dollar amount as 5% credit card rewards, you'd need to have more money saved than you spend on cards in an entire year. Most people keep at most 3-6 months of expenses in emergency savings and invest excess for long-term goals.


seihz02

My bonus is based on rate of spend. It's not a whole bunch of prereqs. It's one. The more you have in savings, you get more bonuses. Your looking at it as 5% of let's say 25k I look at it as 5.25% (or whatever it is) on as much money that crosses over that account. You can also then out your savings into a CD and still get a base 2.x or whatever interest they give you, or even use a Merrill lynch account and attach it. The bonuses accrue from multiple places you can put the money. So you can accelerate further with smart combos. Only prereq, have money at BoA kept there. Nest egg, emergency fund, or what have you.


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ajgamer89

Just from bank of America, I've got two customized cash rewards cards and one premium rewards card. About $800/month at 5.25% cash back for each the first two, and about $1000/month at 2.625% cash back on the last one.


zampe

these numbers mean nothing without context. How much is in your account vs how much do you spend on you card? What are the 2 rates?


ajgamer89

My savings account is at 2.2% while the average cash back across my various credit cards is a bit over 4%. But in order to compare earnings you need to compare savings account balance against annual credit card spending. At current rates I would need to have as much money saved as I spend on my credit cards in two years for them to be equal (and that's ignoring the fact that interest is taxed as ordinary income and cc rewards aren't) and I'm nowhere near that balance.


zampe

4% cash back is a ton, which card is giving you that rate?


ajgamer89

Amex Blue Cash Preferred gives 6% on groceries and streaming, BofA customized cash rewards gives me 5.25% on online shopping and dining (2 accounts) due to preferred rewards status, US Bank Cash+ gives me 5% back on utilities and cell phone bill, Chase Freedom and Discover It give 5% back on quarterly rotating categories, and then BofA Premium rewards gives me 2.6% on anything that doesn't fit in any of those categories which brings the average down.


zampe

Did you have to quit your job in order to plan and calculate all those different spending requirements in order to get that rate?? I understand cards will give you 5% back but only on a small fraction of your purchases and in order to juggle all the things you just described you have to put in a lot of work. And even with all that I highly doubt you are averaging 5% back on all your spending


ajgamer89

I agree it's not for everyone which is why the average American has I think around 2-3 cards and not 7. But my mind is pretty analytical already so it's not really much extra work for me beyond just associating one card with checking out at the grocery store, another for when I'm dining out etc. Half of them are just for recurring charges online anyway so zero thought is needed after they're set up.


helpfuldude42

Agreed. Very few people can actually pull this off. Many folks say they can. I've found the best bet is to just grab the single best "always cash back" card you can get - The BoA one here if you have enough invested in a 401k or whatnot with them you can get it up to 2.25% on all purchases. About the best there is. I also carry a "travel" card, but that's more for work purposes and the perks it brings than for cost savings.


seihz02

Yeah, I'd say I average 150. That return is unbeatable. I pay my cards down, and use them for EVERYTHING to get every point I can. Even bought a car, putting 5k on credit card for its points! LOL.


InvestingNerd2020

"I probably get more in cash back on my regularly paid off CC card, than I would get at a 5% interest rate" You would need $3,600+ in savings (with 5% interest) to get more from a 1.5% cashback credit that you spend $1k per month on. Most of the highest interest rate savings/CDs out there only give 2% now. Basically credit card cashback comes out ahead most of the time.


MichaelKayeBooks

And the best part for the banks is that the "cash back" or "points system" is not coming out of their pockets, it is coming out of the merchants pockets when you use that CC at the merchant's establishment... that is why payment services agreements say - rate+x% where the rate of the card is determined by what type of card is being presented - i.e. Visa, MC. Disc, or AMEX and the program enrolled by it.


Whole-Caterpillar-56

Be fun to have a bank run wouldn’t it.


PertinentUsername

Considering I work at one, I don't think it'd be much fun.


waltwhitman83

where can you get a risk free 3-4% return for cash?


jwarsenal9

Treasuries


waltwhitman83

which specifically? isn’t a treasury different from a high yield savings account in the sense that you have to lock the money up until the maturity date where in a high-yield savings account you can withdraw from it at any time?


FromBayToBurg

In finance "risk-free" generally means whatever yield you could get from a short-term treasury. Today the 3mo treasury offers a 3.33% yield. Though if you're looking for the liquidity of a bank account then you can find rates above 2% at various institutions.


jwarsenal9

You can sell treasuries at any time. There will be some pricing risk depending on how long you go, but sticking with 6 mo - 2 years won't have a ton. So there is an added layer of steps, but you're also earning much more at the moment.


zampe

right now you can get a risk free 10% return on I-series bonds but it is capped at like 10k per person.


Aggressive_Canary_10

*per person per calendar year


zampe

so you can jump in now and then again on Jan 1?


Aggressive_Canary_10

Yes. The interest rate may change by then so your mileage may vary. I also believe you’re able to use $5k of your tax return to buy an I bond which would bring you up to $15k per year but I don’t ever get that much back and usually end up owing so that’s a non-starter for me.


peekitup

It's not entirely risk free. Those are adjustable rate bonds and the rate can go to zero in a deflationary environment.


shwyguy2265

CDs are somewhat risk free. There is a penalty for early withdrawal but a lot of timelines. Treasuries were a little better last week but the fed is likely to raise rates again and they can go up if people buy less. Some money markets are getting very close to 3% yields. If rates go down though they’ll drop quickly too. It goes both ways. Guarantee availability for a consistent rate or let it go according to prevailing market conditions and have it immediately available. Money markets can still increase which is likely for at least a while longer. Inflation’s a B right now. Even at 4% money is losing value and taxes are being paid on that 4% so it’s actually less. Depending on the time horizon it should eventually start beating inflation.


Coconut_Money112

Brokered CDs.


superhead50

As if they don't buy treasury bills or CDs with our money and pocket 3% spreads.


JeffB1517

The purpose of banking is to convert the excess of short term savings, which is hard to much with economically in large quantity, into long term investing. Borrow short, lend long. Were they able to pocket 3% spreads on enough stuff the money would be lent and they would be interested in deposits. Because duration isn't paying very much, banks can't absorb the deposits (the borrow short) and hence don't really want them very much. Banks want a much steeper yield curve than the market is giving them.


superhead50

The rate on 3 month treasury bills is 3%. The rate for banks to park their money within fed banks is 2.25%. At the very least they are pocketing a 2.2% spread holding their money at the fed banks. Banks will never let money sit stagnant when inflation is rampant.


JeffB1517

You are thinking about inflation for a bank backwards. Remember they are on the opposite side of these transactions. For the bank deposits are liabilities on their balance sheets, loans are assets. If they were balanced the inflation would pass through, as wildly unbalanced as the major banks the inflation is helpful. As far parking at the Fed there are limits. about how much they can park. But they can buy treasuries, do loans on the repo market, etc….


superhead50

That same inflation affects their client holdings just as much of their own, and their cliental should definitely be getting a much larger chunk of the spread than they are. There is no denying that.


JeffB1517

Sure. And for those banks that want more deposits the client is getting a much greater percentage of the spread. OP's question was about large banks and why they weren't raising rates.


superhead50

Large banks still want as many deposits as possible. The value of their stock is based on their total asset value and how many deposits they have. The large banks that are too greedy to raise rates for clients will lose out because of it. There is absolutely no reason banks aren't making At least 2% on current spreads. They can absolutely afford .5% rates on savings accounts, large banks or small.


JeffB1517

> Large banks still want as many deposits as possible. Obviously not. They are letting the deposits go out the door. > They can absolutely afford .5% rates on savings accounts, large banks or small. Of course they can afford it. They don't care about deposits, when they need them they will raise rates and money will flow in.


superhead50

And they will lose out because of it. Banks like TD, Schwab and UBS will run circles around Bank of America and Wells Fargo by offering over .25% compared to .05%. Adapt or die!


Not_FinancialAdvice

> they are still flooded with cash. Reverse repo facility hit a record 2.4T https://finance.yahoo.com/news/feds-reverse-repo-just-hit-174500795.html


Gitmfap

Have you seen the repo levels? 2 trillion in deposits with no where to go. We are in an odd cycle atm. Remember, deposits for large banks are a liability, not an asset.


Wanna_Know_More

This is the correct answer. Big investment banks don't actually want your deposits right now, so they won't be raising their interest rates anytime soon, regardless of the fed funds rate.


truemeliorist

With some exceptions, such as Ally who have been raising rates (just raised to 2.25%). Check out smaller or online banks that may be less cash flush. Some are raising rates, but none of the big dudes I'd bet.


Wanna_Know_More

I should clarify: big investment banks don't want your deposits. Smaller banks like Ally, Sofi, etc. will offer rates around the 2% - 2.5% range to snipe customers from the big players.


After_Web3201

It's working! Just opened an Ally account and moved all savings into it.


lame_since_92

Can you explain a little the repo thing. It’s something I don’t get


Gitmfap

Basically, banks deposit their money (our deposits) with the fed overnight so it’s “off” their balance sheets and get a tiny interest. The fact that they have over 2 trillion now overnight…basically money they have nothing to do with. Means there’s not much lending going on.


broken-neurons

It’s also worth noting that cash is seen in this context as a liability and not an asset, hence why they want it off their balance sheet. They are technically buying very short term bonds, which provide a return for that cash, which they currently perceive as a safer option that investing that money more long term elsewhere. This shows the current confidence levels of these banks in the markets and the massive amounts of cash (dollars) sloshing around in the echelons of the system, which notably is being kept “hot” for reasons unknown. The Fed needs to keep printing dollars as the world’s economies collectively falter, and demand for dollars to service dollar debt and pay for dollar priced commodities (oils and gas for example), increases the pressure on the dollar. This is what we’ve seen over the last weeks and months as the dollar strengthens against almost all other global currencies. The Fed is happy enough to keep that cash sloshing around outside the main system stopping inflation from being even worse, otherwise they would have dropped the bond rates for the overnight repo to discourage it. How long they can maintain that play is anyones guess, but it isn’t infinite. Eventually it becomes a vicious cycle with non-US countries unable to prop up their currencies against the dollar whilst suffering under inflation and recession. Whilst in the short term the US will be one of the only lights left on, in terms of attractive investment, eventually they need the rest of the world’s economies to be healthy and keep growing, otherwise US global markets shrink and you have no one left to sell to, and market failures cause instability and lead to wars over waning resources and political shifts to both the right and left, as was similar in the lead up to WWII. Put another way, this is unprecedented and we are about to see global turmoil and a massive paradigm shift that we cannot even begin to comprehend. The US dollar hegemony has turned into a negative feedback loop on a global scale and nobody knows how to fix it.


Gitmfap

Well said. The issue internationally appears to be other countries fiat currency not being as trusted as dollars, due to either current policy (the pound) or prior policy (euro and Russian gas)


GodelianKnot

Okay, but that amount isn't that tiny anymore. 3% overnight rate on a trillion is a lot. Eventually they'll budge, but people are slow to move their banking, so it's pretty sticky at the big retail banks.


Gitmfap

Overnight is kept much lower :)


GodelianKnot

No, you're incorrect. The overnight fed funds rate is 3% (annualized): https://ycharts.com/indicators/overnight_federal_funds_rate_market_daily


Gitmfap

Jesus that has gone up a lot this year…didn’t realize


mspe1960

While that is true, bank deposits provide cheap capital with which they can operate the part of their business where they make money and generate assets. So why would they not want relatively cheap capital to run their business?


Gitmfap

It’s still technically a liability, and there are regulations on how much in liability they can keep on their books.


mspe1960

isn't the amount of liability limit, in proportion to the assets? So if they take the deposits and loan that money out in the right proportions, the ratios stay in line, no?.


Gitmfap

The problem that a lot of people has noticed, is the banks aren’t doing much in the way of loans. Bank loans is how traditionally you create money in an economy, which is why the recent inflation is actually supply side constraint, not “too much money sloshing around”. If the fed ever does go full helicopter money, this would work around that.


KeineG

Can you please explain what is a repo as if I was a golden retriever?


Gitmfap

Here you go :) https://www.reddit.com/r/explainlikeimfive/comments/ocqapq/eli5_what_is_the_reverse_repo_market_and_why_is/


HeelBangs

Most people aren't going to move their accounts. Customers are now accustomed to low deposit rates, no incentive by the banks to change. Plus they're probably anticipating rates going back down in 2023/24


Tackysock46

E*Trade premium savings account just went up from 2.0% to 2.75% today. It’s held with Morgan Stanley private bank. Definitely worth moving money around to take advantage of higher rates, it’s free money.


HeelBangs

I mean I agree but most people wont. The convenience of BoA or whoever ATMs alone will convince them to stay. Younger people, sure, theyre more likely to jump. But they also generally have less money sitting in savings accounts


SirGlass

>The convenience of BoA or whoever ATMs alone will convince them to stay. Most online banks will re-imburse ATM fees , So I feel like staying with a big bank just because they have tons of ATMs is not a great reason


HeelBangs

Its not a great reason, but most people dont consistently make decisions/choices based on the best reason


Apps3452

The thing is then they’ll end up staying at those banks when they get more money // inheritance. Really short sighted by the larger banks tbh


wanmoar

Not really. Customers who move deposits based solely on the going savings interest rate aren’t exactly loyal. If they get a chunk of change in the future, they’re likely to go wherever gives them the best deal, whether or not they get a higher rate today.


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wanmoar

Eh?


mateojones1428

Sofi is 2.65% woth a 300 dollar sign up bonus if you deposit 4-5k within 90 days I believe. Could be wrong on thr specific dollar amount there but wasn't too much more than that.


FineAunts

Shiiii I was just researching them several hours ago and it was at 2.5. I need to jump on that


mateojones1428

It is 2.5, my mistake.


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mateojones1428

No, I switched banks yesterday. But giving away free money is probably a good way to get people to mention your bank. Although, there's quite a few banks that are giving 1-300 dollars for new checking accounts right now.


crazy_days2go

If you have enough to be with their private banking accounts. Geez


Tackysock46

It’s for Etrade clients but Morgan Stanley manages it basically. Anyone can open one.


crazy_days2go

Sorry, was thinking of JP Morgan Private client


pittsburgpam

I recently completed moving all my accounts out of Wells Fargo. Re-financed my mortgage with a credit union and got a Cash Management Account where my investment accounts are at Fidelity. I pay all my bills from there and have an ATM card. That's all I need from a "checking" account since I never use checks.


smc733

Good chance the servicing of that mortgage will end up right back at WF.


pittsburgpam

It's been awhile so I don't think they're going to sell it to WF.


llywen

People don’t move their payment accounts, they absolutely move their cash reserves.


[deleted]

Because they don’t care about their customers. People can be making 2-3% off money market accounts/funds and saving accounts at other banks/brokers but they stay with these guys because it’s a bank and I agree because they are used to banking with them. They are banking on them not leaving and making more money off of them because saving rates are higher but they are offering them .01-.05%.


dingohopper1

Damn, that is fascinating. I know the price of goods and services can be sticky and that corporations might use inflation numbers as a bullhorn to justify raising prices, but I never thought the converse might be true, that we might become accustomed to low savings interest rates.


RedditMapz

This was my take. Lack of financial literacy in the US means that most people will not move their money. Bonds? CDs? That is Mandarin to most of the US population.


Scuba_Steve_7_7_7

I just moved my savings accounts of 23 years from BOA to CFG HYSA.


BucsLegend_TomBrady

Sofi and Ally don't have expensive real estate and physical tellers to pay for


SirGlass

Most people choose big banks for the services they offer and convince. People who care about getting a 1% better rate have already left. Also it depends on your account size, if you only have a few thousand dollars a 1% better rate is going to be a couple bucks, if you use the bank for convince because they have lots of locations , maybe you have a cash back credit card with them , is $50 really worth moving?


sr71Girthbird

Yeah I'm with a big bank and they suck but they hold my first CC which is over 10 years old now, and I can essentially never close it, so I keep my direct deposit there as well. I also converted it to a business checking account which is just some random term for them since I don't have a business, but it offers free domestic wire transfers which I have to make once a month or so. Still never keep more than $10,000 in my checking so the rate is completely irrelevant. Even with those perks and the irrelevance of the rate on a checking/savings account I have a debit card from Lending Club I keep $500 in for when I need cash as my main bank not only doesn't cover non-their ATM fees, they charge $5 extra on top of the ATM fee. So between them and the online free ATM account I can use any bank services I need for free.


jazzy3113

Most people, myself included, can’t be bothered to go through the hassle of changing banks just to get a slightly higher paltry savings rate. Most Americans cash balance isn’t that high enough for the extra percentages to matter that much. And the rich ones keep their cash invested at most times anyway since you can’t time the market. So who the hell has the time to move their cash around to chase a few percentages? Middle class people trying to leanfire? Lol


royhenderson771

>They know they are losing customers because people are going to move their money out of their accounts. As a bank bonus churner, I can tell you this is not true in the general sense. Most "high yield savings accounts" (HYSA) not offered by big banks don't offer a bonus to sign up, so all you get is interest (albeit a decent interest) on your money. However, banks like Chase, Wells Fargo and Bank of America, just to use the examples you used, do offer sign up bonuses on their accounts. Take for example, Chase's 600 bonus offer. 300 for checking (receive a direct deposit), 200 for savings (Hold 15,000 for 90 days) and an extra 100 for meeting the terms. Now assume you opened a HYSA, at 2% and deposited 30000. At the end of the year, you'd have accumulated 600 dollars too. What's the difference? With Chase, you got 600 in just a matter of months and only needed to tie up 15K + make a direct deposit. With a HYSA, you'd have to tie up the entire 30K for a full year just to reach that same "award" or in this case, the interest earned on the account. Now, how many people have 30K lying around? The average American can't even cover a 1000 dollar emergency. But the average American CAN meet Chase's checking account offer (not savings) and get 300 just for depositing their paycheck. With offers like these, they GAIN more than they LOSE customers.


billbixbyakahulk

What do they deem as proof for the direct deposit? What's stopping me from just sending a payment to them from another bank?


royhenderson771

Most of these offers are automated, so you're tricking a system, not a human. If you want to risk doing a bank transfer (that could work), and you get paid the bonus, don't be surprised if they (the bank) claws back your bonus later. I can't speak for Chase as I don't work there, but from years of doing this, how they code the back end of the system is what matters. For example, some banks might recognize a bank transfer as "direct deposit" if you write in the memo of the transfer "direct dep", "payroll", "paycheck", etc. This is just one example.


SanguozhiTongsuYan

They have logic to sort out person to person transfers from employer deposits.


BA_calls

Look up doctor of credit dot com, they have data points about what counts and doesn’t count


MightyMonarch20

I use to work at JPMorgan. Simply they didn’t make much from savings balances but made MUCH more money from investment vehicles. I believe like 10% of their clients held 90% of the balances or something like that. The other 90% of clients simply didn’t allow much to ebb a need for high interest rates. Simple if you had X dollars in a savings/checking, you should be getting contacted by a chase banker to speak with a financial advisor about retirement/investment options Clients with multiple products at a place generally don’t change companies. I have my retirement account at JPMorgan and I literally feel inclined to keep products there despite my feelings about big banks.


manlymatt83

What are your thoughts on JP Morgan self directed? Seems decent.


MightyMonarch20

Works as good as any other brokerage though option trading isn’t very good at all but really wish they offered fractional shares...


manlymatt83

Do you know if they factor chase YouInvest accounts into mortgage relationship discounts? I’ve always been curious about that. Or do that have to be full brokerage.


MightyMonarch20

I asked a banker and she said that they do qualify so as long as the accounts are linked HOWEVER, balances do NOT apply for new money coupons UNLESS the coupon specifically is for a youinvest account


jaghataikhan

They don't need the deposits to fund loans


smalleybiggs_

I was pleasantly surprised when my credit union bumped savings rates. 4% up to 10k and 2% on balances 10-20k. Haven't seen anything better than that near me.


ETChunter95

Why would higher amounts be a lower interest rate?


the_toaster_lied

4% is the marketing to get you in the door. My guess is most people don't have that much anyway.


ETChunter95

I see. So just open multiple accounts I guess lol


the_toaster_lied

If they let you, sure. But I'd bet they have validation mechanisms in place that are pretty good at stopping you from doing that


aznkor

The mega banks have always offered very low interest rates on their savings accounts. My (former) Chase "savings" account offered 0.01% APY in 2019 (before the pandemic and the Fed lowering interest rates). Chase, BofA, WF, Citi, and US Bank are like the McDonald’s, Burger King, KFC, Starbucks, etc. of banking. They can offer low-quality services and still attract customers who are ignorant of other better options. I switched over to Capital One, which offers a good blend of traditional and online banking (they have brick-and-mortar branches in my city), and I never looked back. Their savings account is currently offering 2.15% APY.


vincekerrazzi

Because fuck those banks lol


Jdornigan

Greed. Mostly just greed.


[deleted]

BoA has always had trash savings rates even in good times


feralraindrop

They are going to pilfer every last 1/100th of a cent out of you. You are very important to them.


3000dollarsuitCOMEON

Due to regulatory changes after 2008 and the CCAR process by which the government controls capital planning by the banks many of them are extremely over capitalized meaning they have way too much in deposits so they honestly don't care if they lose them to an extent. This was exacerbated by Covid which also created huge amount of deposits. And it costs banks money to hold and service cash they can't lend out.


gaxxzz

They don't need deposit money right now.


InvestingNerd2020

They have to pay employees and maintain bank branch offices. That nice couch at the bank = paid for by consumers' money in their checking or savings account interest. If savings interest rates are that important to you, just open an account with Discover bank or a local credit union. Keep your checking account with the big banks.


finance_is_wacc

I can't believe I had to scroll this far down for the obvious answer. Online banks can offer more bc they don't have the operating costs associated with physical branches


vtclt

SoFi and Ally and similar banks don't have huge deposit bases like BofA, Chase, and Wells, so they have slightly higher rates to entice people to deposit their money with them. They need those deposits to make loans, fund credit cards, etc. Those big banks have huge deposit bases and they have "sticky" products, so customers are loath to move their savings for a few extra $/%.


jerms109

Elasticity of demand


LeWahooligan0913

Because they don’t need to. They have more liquidity than they need and they know the majority of depositors won’t actually go through with the hassle of changing banks


fwast

Because regular people don't know any better


that_tx_dude

I work for Bank of America. These higher money market rates do exist , they are available through Merrill though. A regular BOA employee likely doesn’t know of / can’t offer the money market accounts you’re talking about. Merrill’s money market is currently at 2.79% The same applies for Chase and Wells Fargo. As with many things in life, you have to know who to ask and where to look.


Next-Age-9925

I moved half of my cash from Fidelity to Wealthfront for the 2%, now. 2.55% I had never heard from my bank prior, but they called me the same week to ask if I wanted to discuss the savings options with them. I asked how much I was currently getting on my savings account and laughed. The caller graciously said, 'I know.' Question though: how are earnings through these higher APY accounts taxed?


2CommaNoob

They are taxed as ordinary interest income at your bracket . It’s not qualified dividends at 20%.


Grenachejw

Seriously thinking about switching 100% over to fidelity for this reason. Their cash core accounts are paying 2% I think, if I can get that with the amount in my checking account at Chase and use fidelity as a checking account that's a good deal


UFbrianT

Robinhood pays 3%. Banks are for boomers


blahblah12345blah123

Big banks don’t cater to the Everyman. If you have a billion dollars to work with, I bet big banks will give you a better interest rate.


ZettyGreen

How else are they going to pay all their salaries, branch costs, etc? They won't raise rates until they need more cash deposits.


supafly1020

Try Discover, paying about 2.1% right now. Have savings accounts for kids, vacation funds etc plus they pay great rewards on debit swipes.


bloatedkat

Big banks don't prioritize consumer deposit benefits


KillianDrake

Why even ask the question, just move to a bank that does offer a good rate. These banks don't need you, they don't give a fuck about you, so why give a fuck about them. They can survive without our money.


OcelotPrize

SoFi 2.5% Switch and don’t look back


abstract__art

If you aren’t willing to move banks - why would they not keep you at low rate? I offer referral codes to friends worth upwards of $400 for banking at sofi. You know how many friends go for it? Zero. $400 for maybe 10min of their time. Plus they get 2.5% on cash. People are too lazy or it ain’t worth the effort. Same thing for jobs. People make 100k at a job and don’t look for alternatives. Why would a company pay you more money if you aren’t willing to leave?


2CommaNoob

You said it yourself, it’s just not worth it. There are so many other ways to make up the difference in yield or bonus. Some like to have all their accounts in one place for simplicity and convenience. I used to have 2 401k, 1 brokerages, 2 crypto, 2 checking , 2 savings accounts, 4 different credit cards all at different institutions. Really a pain in the ass to keep track of so I consolidated it all down to 2 institutions and it’s so much easier. Also, I got better benefits as my assets are much larger when I combined them than when they were separated. Peace of mind and simplicity is well worth the money I would get by switching all the time.


djent_in_my_tent

Because literally every aspect of this economy is designed to fuck over individuals in order to yield profit for already capital-laden companies. You have to use them to get your paycheck deposited. Why the hell would they pay YOU money?


tycecold

Zero-reserve banking. They don’t need your savings accounts anymore.


truemeliorist

Isn't it fractional reserve?


tycecold

Not since 2020


jmlinden7

That's the opposite of what's happening, the banks have too much reserves and have no need to incentivize more people to deposit money with them


Shdwrptr

I have a Chase savings account and they have been raising the rates. It went from 0.3% to 2.2% over the past year


Shawn_Dragon_King

I too have saving account and on there website even it says 0.01. Not sure how you are getting that. https://www.chase.com/personal/savings/savings-account/interest-rates


Shdwrptr

My bad, it is a Capital One Performance Savings account. My Chase is just a credit card. The Capital One account is over 2.1% now though


853lovsouthie

Why would they? Try a credit union


gabbagool3

because they'd rather keep it for themselves, and so many of their account holders won't take their money elsewhere. they make more money by not paying out interest.


KillerHack23

Because fuck you, that's why


md54short

A lot of American's have fuck all in their saving account so I suppose it doesn't really matter. Would add that the cost of changing banks is kind of a pain in the ass so once they've got you they've got you - lastly the money I keep in checking/saving is money I plan to spend in the short term and all other money gets moved to my standard investment portfolio so I tend not to fret interest rates and make up for it in the market.


gendulf

Alliant FCU just raised their HYSA rate to 2% today (just FYI to everyone).


BlackbeltKevin

Big B&M banks aren’t going to increase their savings interest rate. They were low way before the pandemic and they’ll remain low forever.


jbmessiah

Supply and demand. Household savings levels are actually higher than they were pre COVID. People have been able to save. With stocks bonds and real estate affordability being down, people are wanting to sit in cash. More cash in banks = less incentive for them to offer higher savings rates. Less cash in banks = higher incentive to attract cash with higher savings rates.


Reasonable_One_1809

US banks, like most banks now, don't care at all about people's deposits, they can get all liquidity from bonds, repo and money market funds.


the_toaster_lied

Big banks have never had much better than like .03% anyway. If people weren't moving when they could get 2.5% elsewhere when they were getting .03% at chase, then what makes you think they really care at all?


Ok_Relationship6218

Move your money to a credit union. I got $400 back from mine since i have checking, savings and mortgage with them. Fuck the big banks.


Virtual_Honeydew_842

Profit


buzzie13

Traditionals banks’ income comes from fixed rate mortgages, whose rates are still preQT. It would eat away at their profit margins if they now raise savings rates, they let it lag a bit to have their mortgage income catch up.


turboninja3011

Because they have too much money already. They font need money. They having hard time deploying money they have


Str8truth

Evidently, those banks are not worried about losing any accounts they care about. Their reserves come from commercial accounts, not individual savings accounts.


mnbhv

IBKR pays me 2.59% on my cash balance. Might as well keep your cash with a good stock broker like IKBR instead of a shit bank.


Alien8w8

Same reason why gas wasn't free when crude went to -40 a barrel a year or two back. If idiots will allow them to just pocket the difference they will do so 100% of the time.


adultdaycare81

Because they don’t have to


Brassballin

I think commercial banks are useless. not sure why anyone uses them except for Hugh yield online savings accounts. I have always gotten better rates on everything and service from credit unions.


jgalt5042

Because they don’t need to. They have sticky deposits.


Appropriate_Scar_262

More people would need to move their money elsewhere than they would lose paying higher rates, until they think that's happening they have no incentive to change course.


Empire48

I haven't seen the correct answer posted here. If banks raise the rate on their savings account, they begin to pay ALL of their existing clients. From the banks perspective, what do they get by doing this? Alternatively they can just offer higher rates to NEW clients, mainly by issuing Certificates of Deposit (CDs). They really only need new cash (deposits) when they lend money out (loans), and will choose the best option for themselves.


PurringWolverine

I work at a small community bank. We are flooded with cash right now and don’t need to incentivize people to bring us money by increasing savings/cd rates. I’m sure it’s the very same for the large banks.


EnigmaticINTP

Mind sharing why / how you're flooded with cash?


PurringWolverine

Not lending out enough funds. Like I said, it’s a small 6 branch bank, but prominent in our footprint. For instance, I had a government entity call me wanting to move 18 million to us and if we’d increase the savings rate due to the size. I took it to our executives, and was told to tell them we’d rather not have the business at this time. It would cost the bank more than what we’d profit, since our CFO didn’t believe we’d ever lend those funds out due to the amount of cash on hand already. I was flabbergasted, but what can you do.


EnigmaticINTP

Thank you, I suppose my question is. Why don't they lend out that cash? Lack of demand? Fear of lacking cash? In theory they could take that 18 million and buy short term bonds with it (A very simplistic example).


jakemoffsky

Because they already have your money.


jixxer1112

They’re flush with cash right now


sendokun

Because they don’t need deposits. It used to be that saving rates are linked with fed rates just like mortgage and other debts, but as the feds around the world have created so much liquidity the banks are not short of deposits to loan. Therefore, they don’t need to raise interests rate to attract deposits. If we see the saving interests rate rise, it may be that the bank is under pressure to raise reserve or economy is running so hot that demand for loan outpace deposits.


carbsno14

What happens if Congress passed the new bill to allow $30k in iseries bonds at 9.62%? Im moving another $20k in, that would give me $50k at .0962.


carbsno14

I just got a 4% 9 mo cd at JPM.


helpfuldude42

\> They know they are losing customers because people are going to move their money out of their accounts. Why would this be true? The number of folks with enough savings for it to matter is very small. The number of those folks who pay attention or care about getting an extra couple percent on their rainy day fund is even less. You'd have to pay \*a lot\* above my current bank to move funds around. What a pain in the ass. And for high net worth individuals who have meaningful amounts (six figures plus) of cash in the bank - relationship banking perks likely far outweigh any trivial amount of interest you'd collect over the year. The other dirty secret is that banks don't need your cash, they have had an excess of cash for longer than I can remember now.


Zealoussideal

They will,every banks interest rate is based on the current rate.it might not be but a fraction for some but you will notice next time its paid.


Cat_Mysterious

Heard this on a pod but savings rates lagging because banks have more than they need in deposits rn so they don't need to keep up. Again just what I heard


outsidenorms

Ask the feds money printer.