Why Your Bank’s Savings Rate Isn’t Increasing With the Fed’s | WSJ
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- Опубликовано: 19 май 2024
- The Federal Reserve’s interest rate continues to climb, reaching nearly 4% in November. But the average savings account’s interest rate is just 0.16%. Here’s how banks determine that rate - and which accounts are paying closer to the Fed’s.
Illustration: Adele Morgan
#Fed #InterestRates #WSJ
.16% when the bank wants to borrow your money, 5%+ when you want to borrow their money xD
It's all supply and demand. When u deposit into the bank, you are not only lending them money but u demand them to give u financial service that they take care of ur money. That's why banks don't pay much cuz their service nullify the cost of borrowing ur money.
You lend to the bank at 0 risk, since the deposit is insured and tight regulations govern the banks.
The bank loans out money at various levels of risk, even very high sometimes. They need to be compensated for taking on such risks.
If you also want to get yield, you need to play by the rules: buy riskier assets such as bonds and get a return proportionate to the risk you choose.
@@magahongkong4664 yes I understand but .16% interest? that seems a little low
@@ldIezz Again, supply vs demand. You don't have to borrow from the banks. You can pay things with cash. Banks don't have to borrow from you cuz there are someone else who demands bank service for book keeping their account and give them cash whenever they want. Think about it, if u hire a bodyguard to protect ur money, that costs a lot. The banks do that in the wholesale method. They hire 1 team of bodyguard to protect billions of customers' funds. Same as book keeping. Hiring 1 team to take care of billions of people worldwide. Buying a few machines to keep track of crediting rating, solvency, risk...Who said u have to borrow from them? You can choose to work ur a$$ off and collect cash then spend later. Similarly, with small new banks, they have higher demand so they offer customer deposit w/ higher interest so they could get their hands on the funds. But smaller banks will do dangerous things while big banks like Citi, Wells, JP Morgan...would be safer choice for consumers. I admit after many financial crises, banks merged into megabanks like today caused monopoly pricing but on the hindsight, because they merged, they could do more wholesale which makes them safer because they will always generate revenue in a safer way instead of dong some risky things like small new banks.
@@wbay3848 no, banks raise payouts to compete for deposits. When cash is abundant, you have no incentive to pay yield.
The fin-Markets have underperformed the U.S. economy as fear of inflation hammers the prices of stocks and bonds. My $400,000 portfolio is down by approximately 25%, any recommendations to scale up my returns before will be highly appreciated.
You have to get a financial-advisor/broker to aid you diversify your portfolios to include commodities, inflation-indexed bonds and stocks of companies with solid cash flows, as opposed to growth stocks where valuations were based on future potential earnings,
@@sheliaswelttk2535 Very true , I diversified my $250K portfolio across multiple market with the aid of an investment advisor, I have been able to generate over $450k in net profit across high dividend yield stocks, ETF and bonds in few months.
@@williamskohler8337 How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.
@@gabriellewilson5625 well, credits to Tracy Helene Aalvik, one of the best portfolio manager's out there. she's well known, you should look her up
@@williamskohler8337 This recommendation literally came at the right time, I dipped by $11k in stocks last week alone. Its crazy! I just looked up Tracy Helene Aalvik online and researched her accreditation. She seem very proficient & I wrote her detailing my Fin-market goals . Information they say, is power. Thanks for this.
Thanks for this amazing information !! If you don't find a means of multiplying money, you will wake up one day to realise that the money you thought you had in bank, has finished, Investment is the key to sustaining your financial longevity. And not just any investment but an investment with guaranteed return., I pray that anyone who reads this will be successful in life too 🙏🙏🙏
I agree with you. Investment is the key to sustaining your financial longevity. And not just any investment but an investment with guaranteed return.
you've remind me of what someone once said "The mind is the man, the poor is in it and the rich is it too". This sentence is the secret of most successful investors. I once attended similar and ever since then been waxing strong financially, and i most tell you the truth..investment is the key that can secure your family future.
Yeah investment is the key to sustaining your financial longevity but venturing into any legitimate investment without a proper guidance of an expert can lead to greater loss too
exactly! That's my main concern and what kind of investment can someone do with this increase economy turndown
Hello, please what exactly kind of investment are you talking about here, I'm really interested too
Go with an online-only savings bank account. I have AMEX savings and the interest rate is now 3%.
Me too
Ally Bank, online bank, also 3%
same, but with Discover
@@julm7744 I was hoping somebody would responsd with this.
We even both agree that inflation is at least 8%. Although it's probably much higher.
The gov't inflation numbers are low estimates because they don't want pensioners to find out how little money they're getting in subsequent years.
Yes I think your strategy of shorting stocks is a great idea in this environment!
But I just buy some gold and play it safe. Gold always beats inflation and always holds its floor during a depression.
I would love to learn about how to get into the stock short market though. A lot of companies are going to plummet in a higher interest rate environment.
@@julm7744 not everybody has the time to take care of these things after a full week’s job. And some are fine with their 100k 200k/yr high responsibility high intensity jobs + buy a handful of flats to rent out + upcoming pension to support them for life.
As recession fears mount on Wall Street and inflation remains well above the Fed's 2% target, some of the top commentators in markets, business, and economics have been sounding off on just how bad they think the next downturn might be - and how far stocks may have to fall. I need ideas and advice on what investments to make to set myself up for retirement, my goal is to have a portfolio of at least $850k at the age of 60.
It’s precisely at times like these that investors need to be on guard against the next certainty. You don’t have to act on every forecast, hence i will suggest you get yourself a financial-advisor that can provide you with entry and exit points on the shares/ETF you focus on.
I agree. Based on personal experience working with an investment advisor, I currently have $385k in a well-diversified portfolio that has experienced exponential growth. It's not only about having money to invest in stocks, but you also need to be knowledgeable, persistent, and have strong hands to back it up.
I’m new to all this, heard it's a good time to buy and basically I've just got cash sitting duck in the bank and I’d really love to put it to good use seeing how inflation is at an all time-high, who is this coach that guides you, mind I look them up
@@watchingtariq4637 Sure, the investment-advisor that guides me is Eleanor Cecilia Schnell, she popular and has quite a following, so it shouldn't be a hassle to find her, just search her
Thanks, I merely looked her up on Google and was highly impressed by her credentials; I got in touch with her because I need all the help I can get. I just set up a phone call.
Always good to hear your thoughtful and logical analysis. I don't care about bullish or bearish market. Trade a small percentage of your portfolio rather than going in and out every couple weeks trying to time the market trading went smooth for me as I was able to raise over 8.4 BTC when I started at 3 BTC in just few weeks implementing VERMONTCORPLTD and tips..
Stop blaming the fed and uninstall raid shadow legends. That's how your savings increase.
Raid Shadow Legends? All the billionaires play League of Legends!
@@stapleman007Billionaires don't play video games.
Because bank's are greedy even though they got bail out by government money
There was a meme with a bank teller seeing how much money was in the account of the flirting patron but I argued brick and mortars are ripping you off. Told my parents to move their side cash to a high yield-3.25% pays more than my current mortgage rate :P
Some of these online banks allow same-day free withdrawal. Money is saved in a regular checking / savings account, and you'll get a debit card.
You should do a new video about VERMONTCORPLTD ! I really like you’re mellow delivery and you seem like you’re very knowledgeable. I watch lots of influencers and you always seem very calculated and know exactly what you’re talking about and understand it. You’re better at explaining complicated things simply, than any other person on youtube keep it up brother!
I have ally, just went up to 3%
For last line..
Or..I don't have money at all😂😂
THANK YOU so much for explaining this in laymen terms, omg, im SOOOOO transferring the bulk of my savings to an online bank. ill leave my "spending change" in my credit union savings for easy access. this video made it so easy to understand. corporate America, its allllll about THEM instead of US.
I've had an online savings account for 18 years. They actually paid up to 6% back then. It's the only way to go. Some of them take 2 business days to get the money back to your credit union so keep that in mind and don't leave yourself too thin.
Just a heads up. The interest rates will vary over time. Ally bank used to give me 3% interest. Then, for a while, it was only 0.5%. Now, it's 3%. This was without getting a CD. Like the person mentioned here, interest rates were way higher in the past. It sucks now, but it's way better than 0.01% from BofA.
You might also consider an ETF like BIL which holds short-term debt issued by the US Treasury and currently pays a 3.2% yield.
Wealthfront Cash Account (FDIC insured CHECKING account) is currently offering a 3.30% interest rate. They raise their rates every time the fed raises rates. You’re welcome.🎉
Sometimes you guys at the Wall Street journal are very disappointing. Why do banks not pay you more in interest? Because they don't have to.
huh, what do u mean?
Exactly
Truth. That would have been a very short video. 😉
For 4 minutes, it's a pretty good explanation of why and informing people of other options. What more do you want them to do?
Love online banks! Plus many of them have no fees with high-yield savings.
For Now.
A savings rate of .10% is actually high for banks, most are more like .01%. Which is why banks suck and we should all save our money elsewhere.
Nah we have to completely abolish the Fed for saving money to ever come close to making sense
If you're holding cash, you have 100% chance of losing money yearly due to inflation. If you"re holding stocks for 2.5+ years, there is a 100% chance you won't lose money. So where is the real risk?
Misinformation and lack of financial education leads to negative thinking..Have an investment strategy.
Banks will pay you 0.1% on your savings account, but pay their shareholders a dividend yield of 3.5%....Now tell me savers are winners
if you are not on the Fin markt space now you are making a huge mistake, i get it can be due ignorance but if you want to make your money work for you, to prevent inflation from eroding your savings, to build generational wealth and to cultivate good habit and financial knowledge
How can one find a resourceful FA, I buy the idea of employing their services, its a shame market crashes as of late have become a sort of habit for stocks
Buy STONKS!
Why keep your money in the bank when you can earn interest on an FTX savings account? No brainer.
Is my memory broke. What were the interest rates on savings accounts in the 60's and 70's? I have this memory that banks would advertise rates of 5% and 6%.
Saving rates used to be fixed at 5.25%, obviously inflation was higher then that and this was stable economy, now people panic when inflation goes above 0.5%.
@@trivalentclan-mizar9591 Yeah, that sounds right. Thanks for helping my doddering old memory.
Me: Laughs in Online Savings Account (Amex, Discover, SoFi, Ally, ect)
Savings interest rate is the best weapon against inflation.
Public announcement: amex HYSA is 3% right now, and a CIT Bank 18 month CD is currently at 4.25%. If you have a pile of cash sitting I recommend you either invest or put into a saving account/CD. If you’re not sure what to do, watch RUclips videos or ask Reddit.
Edit: this might not really be ‘worth’ the effort if you only have a little bit of money (although still good practice!). If you have 50k+ cash sitting around, then please open an account today, only takes 5 minutes.
Before you put any money in CIT Bank Google their reviews. I was going to but got cold feet after reading their reviews.
@@Troy_Built I know that they aren't fantastic, but I simply put a chunk of money into the 18 month CD, and I will be sure to pull the money out when the 18 months is up so nothing auto-renews. I won't be adding or withdrawing any money to the account, so I don't really care about how great the company/user interface is. The only risk I'm taking is some difficulty getting my money out at the end, but I've marked my calendar a month before it expires so I have time to sort things out. It was the best rate I could find at the moment, and it made a large difference in the return. I wouldn't recommend CIT for anything other than a low maintenance account like a CD.
Good luck wasting the interest on outgoing wire fees to get your money to a real bank.
@@corvettez0695 not really an issue considering how big the return is lol
you can do the same or better if you buy through your brokerage account instead. probably safer as well given the reviews I've read about some of these banks. I was looking at high yield savings accounts and the bad reviews (and everyone saying get a short term Treasury Bill instead), I got cold feet and just bought a CD from a bank through my Fidelity account. 4% interest on a 3 month CD. FDIC insured and everything. all of the brokers seem to offer this, I would look into it if anyone wants a CD. An 18 month CD is currently 4.85% from a few of the banks. I don't want to tie my money up that long though because I think interest rates are going to keep going up.
Of course I'm still losing to inflation, but all of my investments are losing more 😂 .
My interest rate is 3% with discover, not sure what this on about. Schools first though at 0.10% but I never ever kept money with them anyway because it was never a high yield savings account anyway.
Discover is an online bank too. They don't have physical branches. The banks referred to here are ones that have physical branches, like Chase, Bank of America, Wells Fargo, etc.
There are banks with good rates on interest and checking right now. Only problem is you got to research to see if there are any strings attached. Many only pay the higher rate with minimum deposit amounts or only up to a certain amount. Others require that you spend so much on a debit card or have direct deposit.
Imagine using your laptop mic on a WSJ interview
With Ally Bank it's been rising with the increases and it's currently at 3%
My bank has raised my savings rate six times in the last 6 months. Of course, my "bank" is an online HYSA. Free money is nice.
Another good option for pretty-liquid cash right now is an ETF like BIL which holds debt issued by the US Treasury. It currently has a yield-to-maturity (similar to an interest rate) of 3.84%, and there is zero credit risk. Unlike a savings account, BIL can go down in value due to interest rate risk or illiquidity, but typically these would only be small & temporary losses.
BIL is nice. I'm just keeping mine in SPAXX right now. Something about the fixed NAV makes me feel better about my emergency fund.
😊😊😊😊
Just open a Treasury Direct account and start buying 2 year notes yielding 4.5%. Ladder into these because rates are going up higher than anyone can imagine. Fed Funds Effective rate is going above 8% - wait and see. Banks are paying depositors nothing and taking excess deposits and buying 1-2 year treasuries.
Same reason why gasoline prices don't come down when the oil price falls....
A 3.5% return is actually -4.5% in an 8% inflation economy.
Banks wanna make that sweet interest but don’t wanna give people their share
This is wrong, banks do not need your deposits for loans, they create new money when they give out loans. They need deposits for the federal reserve
Ally, Capital One, Marcus, Discover. All good high yield saving accounts with access to Zelle. So instant transfers
would online bank be same as FTX, would bankrupt in one day?
Savings in banks is not a way to make money.
You could be losing hundreds of dollars per month leaving your savings in an insulting account that pays only .05-.3%. The biggest hurdle to switching to a much higher yield account seems to be inertia.
Every time I look up online banks and do the research, they’ve got sh*tty whys and wherefores, caveats, rules, limitations etc on top of current or former customers giving them the thumbs down.
Periodt. Get a HYSA y'all.
Wow Tnx bro good
VERMONTCORPLTD is young. Holding almost anything mentioned here is a good hold because the VHS or Beta will only show in time. I want to hold them early. Its sad that most dont think of these things as good future holds instead of being out of the market and bottom hunting. Are we the adopters or are we scavengers? surely one of these layer ones will become the standard and i dont want to sell any of them too early.
I’m surprised that credit unions were not mentioned, their rates are generally higher, the money is insured under a certain amount), and same day withdrawal is no problem….
It really depends on the credit unions in the region. But generally my experience is that they are willing to maybe be loosed with give you a credit card with not much credit history, but at the time, Chase was 0.01% and my credit union was like 0.02%.
My bank is offering 3.30% APR
mine give approx 7%
Hello where can I get a 10 year cd for 5%? Non callable?
Interest is greed
The very act of opening a loan or mortgage creates money in the economy that did not previously exist
And the bank isn't giving you cash for a loans or mortgage. It's actually a credit they give you
Which the consumer pays back with real money from real wages
When you become a financial society and not a producing society it will crash
The fact interest exists is proof it's greed
The bank not only makes the money back on the loan or mortgage, which infused the economy with money that previously exist, they make interest
That's why banks always make record profits.
It isn't printing real money that causes inflation. It's the creation of loans and mortgages and interest that create inflation
You have fake money being paid back with real hard earned money.
Eventually money created vs real money paid back on a loan or mortgage will ZERO itself out
And tack on interest
The consumer is in the - negative financially always
You put that in really simple terms. Thanks.
Current Bank has 4 percent for the first 6k in savings and Bread Savings has 3.65 percent for HYSA.
I forgot about Current in my post on how to get 4% interest. For a long time they were the best interest payer relative to amount they'd pay on. I have a Current account for my wife and myself maxed out. Current doesn't compound on interest over the $6k limit, and while Current is FDIC insured, their accounts don't have joint tenancy or the ability to declare a beneficiary so if the owner dies, the account has to be handled through probate.
Current is perfect for your 3 month emergency savings. it’s 100% liquid, gives 4%, but only up to $6k so it’s perfect for your rainy day fund
The Economy is and will always be a game of Hot Potato. Or Musical Chairs. The last one to change loses. The one who can control the music can time their possession best. And if you can actually control the music, its incentivized to make sure people get burned by that potato.
Now I know why Key Bank is putting the screws to me on my CD rates. They don't need my money. Will find someone who does. Thanks for the info.
What's the best online saving account? I just transferred to discover to get the $200 cashback at 3%
Check out doctor of credit for where they have high rates and/or bank bonuses for opening an account
Ratebrain has a simple list of banks and their rates
T bills are currently the best, even four week T bills are paying more then any bank CD of any length.
There are banks out there offering 7%
Easy because the government is still holding rate artificially low. Absent of the fed, rates would be much higher
I've seen 4% cds all over the place.
Mine’s matching it.
Interesting how the terminology is so different and complex in the US. We just call them easy access and fixed savers
Mine is. (Ally Bank)
Greed and corruption. That is the only correct answer
The author of the text was probably born after 2008 and is not aware that even the biggest banks in the world can go bankrupt. Saying that banks have no risks is the same as saying that real estate prices never fall.
2008 says hi.
Currently I'm saving some money in a Singaporean bank with 4.7% for 1-year deposit. Thanks to the information in the comments, I'll not consider saving the rest in US banks.
"it could mean you have your money in the wrong place..... "
... What're trying to say, WSJ?
Huh? HUH?!
In a wrong place? Where do you put your money in, WSJ?
I believe a large part of this is the average person doesn’t like having their money illiquid and they aren’t educated about CD’s, bonds, and most investing in general. People like to have the convenience of access to their money whenever they want, even if it means leaving money on the table.
Exactly why my bank account is a local bank paying me next to no interest. I put so much of my income into my 401k that whatever money I have in my savings is enough for emergencies which I want to be liquid. That’s just where I am in life. I do have other investments but I am not going to chase 4% when so most of my money is earning 8-10% year over year.
I use an American Express savings account
Morgan Stanley Private Bank (through E*Trade) offers 3.25% APY for its savings account
Thankfully high yield savings from Ally or Marcus pays 3% now which is the highest I've seen (still losing to inflation tho)
The rate on a savings account will always be below inflation. If that is ever not the case brace for impact because things will get very bumpy.
Morgan Stanley Private Bank (through E*Trade) offers 3.25% APY right now
Capital one is 3% savings lol
It pays to shop around.
Because they are making a bunch of money
4-week T bill beats virtually every bank account, and if you have four of them a week apart you are always one week alway from your money.
You’re right, T Bill ladder beats all the bank interests including bank CD rates.
ftx pays 15%
It's so hard to trust the online banks. We can't even trust our established walk-in Banks, now. For online banking, In one key stroke, there's endless possibilities for more corruption and mistakes. This is only my opinion.
This is why I don't use a brick and mortar bank anymore. High yield all the way.
Another major reason a bank might want to pay a competitive savings rate is so they can acquire and maintain customers. Some portion of those customers may need to take out a loan in the future, and if they are already happy with their current bank, they may look there first.
How can 65% of Americans live paycheck to paycheck while there is an "excess of reserves"?
How do you explain the growing interest rates on overnight deposits from institutional lenders left with The Fed?
Banks so sounds like ftx but banks are insured.
People keeping money in savings accounts are losing out. Just move funds into a money market fund that is keeping up with Fed hikes. Fidelity SPRXX is giving 3.69% and will yield at least 4.2% after Dec rate hike
Last line was answer
Lots of people are not shifting money from Savings to Government bonds
People lazy means banks lazy
So its just greed?
what? almost 20 trillion dollars in deposit? man, that thing is crashing down, that is a lot, how can it be worth that much with that much money printed
why?if only savings lasted longer
I bank w chase , can any one tell me if im doing something wrong? Chase not good? Should i take my money out? I have a decent savings
so do i, i have a small saving account in Sofi which is 3%. also, i recently started a 12-month CD with chase for 3% as well. i honestly still trust Chase more than Digital banks even if they are all federally insured. keep my checking, credit cards and long-term investments at Chase.
Chase is a good bank, but because they have actual retail locations they will never be able to match the rates that an online only bank can. I use Chase for my checking, but use Capital One for my saving as it pays 3%. You can transfer money between Chase and an online bank in a matter of days so it's not a big deal to have both.
@@duncanfriend3766 thats very interesting 🤔
I quit chase recently. Their interest rates on savings and checking have not moved at all even with the recent fed rate hikes. They obviously don't want my money by paying 0.01% so I took it to an online bank.
THATS WH I KEEP MY SAVINGS IN FULL AUTOS
How can they have more deposits than they know what to do with?. Saving counts are down. 401Ks are down. How is that possible?
People still have stimulus money saved. It will end by next year.
Ha tell that to SVB...
As an investor I am constantly searching for solid investment opportunities and the ones presented by Mike and his VERMONTCORPLTD team always rise to the top. I have invested in seven VERMONTCORPLTD multi-family projects and each has met or exceeded Mike's well-calculated projections. Mike is a conscientious investor who maintains discipline in his underwriting and his strategy, to which his success is testament.
[ Ally Bank has entered the chat ]
Almighty God is ONE and Blesses EVERYONE.
Y'all have money in savings accounts?
When referencing corporate America, he said “They don’t really care about you as they make it seem” realest thing he said...I’ve seen experienced it first hand in the DMV. Black ppl aren’t really respected in corporate America. Glad that he was able to get out of there and become his own boss VERMONTCORPLTD
If the savings rate does not rise with the FED rate it will prolong the inflation problem forcing the FED to raise rates longer. That's bearish for bond prices which banks hold.
Who relies on their banks saving account to make money?
Hopefully no one, but you gotta store money somewhere and 3.5% is more than 0.16%
I maxed out an account @ 250k. I'm getting 3% APY, until I find the right investment opportunity 🤷♂ My stocks are down 20% smh. I'd say it is a safe temporary move, which pays my utilities & car insurance.
@@jaimel8219 my parents have always been believers in buying what you can see, invest in what’s in front of you, worked pretty well for them. Might not be the optimal solution to maximise earnings
, will never get you millions, but recession or no recession their houses are renting for more than they can spend…
Your savings will depreciate over time because the Fed keeps printing trillions of fiat money leading to constant inflation.
SOFI offers 3%APY. Get your money right!
I haven't started watching the video but just the title alone is wrong. Online savings accounts have gone up to as much as 4 percent. Many are in the 3.5 to 3.75 percent range. They were only doing about .25 percent just a year ago.
CONGRATULATIONS 👏👏 AND PRAYERS 🙏🙏💓💓💓 BY RAVINDER TALWAR JALANDHAR CITY PUNJAB INDIA
How are so many depositors this stupid? I think it’s because businesses are sitting on cash, and the financial system makes it almost impossible for a non-financial small-business to invest in treasuries or money markets, so you’re stuck with the bank ripping you off
We are down to my last dollar, my wife had to start selling feet pics to make ends meet :(
🤣🤣🤣🤣😂
3.5% is still low. Look up I-Bonds. You're welcome 😁
Online banks is where it’s at. Speak for yourself