Why Are Bank Savings Interest Rates So Low?
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- Опубликовано: 12 июн 2024
- Even though U.S. interest rates are the highest they've been in years and inflation is soaring, don't expect banks like Chase, Citi and Wells Fargo to increase what they pay on customers' savings accounts. Banks today have more cash than they know what to do with and some are actually trying to get customers to take their savings dollars elsewhere. I'll explore why that is and explain some alternatives that savvy investors are using.
0:00 Banking isn’t like the old days anymore
0:32 Bank savings rates haven’t moved
1:20 Why Banks aren’t likely going to raise savings rates soon
1:55 The future of bank savings rates
3:14 What some investors are doing about low interest rates
I’m Dion Rabouin, a WSJ reporter covering markets and the economy. I’ll be diving into all things finance, from the popular and well-known - like crypto and stocks - to the complex and intricate - like leveraged loans, derivatives and private equity. Subscribe to join me as I take a deep dive into what’s making money move and why it matters.
#InterestRates #Investing #DionRabouin 
Игры
Do you know what interest rate or APY you’re earning on your current savings account? Is it higher than 0.06%?
0.5% and that’s “good”
I would have given you a Like if you were working for any outlet other than the Pravda of Wall Street.
Marcus bank has no penalty CDs at 0.65%. QT (if it ever happens) should increase the supply of Treasury securities at higher yields. Even 6 month Tbills are looking attractive now.
@@joshhalliday7903 same
Synchrony is a whopping 0.60%. LOL...maniacal laugh
My first Savings account in 1986 paid 4%. I got 6% when I was in College. Later it fell back to 4% so I put my money in mutual funds paying 16%. Now a days banks pay less than half of 1% which is less than my credit card pays me to spend my money. Sheesh.
back then inflation was rampant too
Yep. Low risk returns are hard to come by these days
also the 16% mutual fund is hard to find.
Grant Moon I think it’s a thing of the past.
I have found myself looking forward to your videos! I always learn so much!🤘🏼
My boy pulled up with the shades and the gold chain lol!!!! Love it!
Great explanation. I am enjoying your channel.
Same here in Denmark. Actually we have to pay to have our money standing on a savings account.
It's a wild world. You all had negative interest rate mortgages in Denmark for a while too, right?
Awesome and entertaining!!! Love it
I’ve always felt like a fool when it comes to markets. Your videos are so easy to understand for me and you do such a great job explaining these complex topics. You’re awesome Dion!
Thank you! Really glad you're enjoying!
Prime Time Dion doing the good work again.
Great video, a lot more going on there then I first thought!
Great talk but how do you not mention Glass Steagall Act? We need to break up investment banking from commercial banking again. Tying all of financial instructions to risky investments with higher profit makes our system far more fragile than it has to be.
Dion, can you explain what you meant when you said, "professional investors are using options contracts to substitute for cash?" Were you referring to selling options or buying options?
Thanks.
It hurts to look back at my 1% interest rate on my Capital One 360 Money Market account in 2019. It's .3% now. I'm looking to jump ship and join a new bank with .75%. Ugh.
The Allen Iverson(AI) of financial journalism! Thanks for this explainer! Now on how to be a savvy investor :-)
Great video. It's not just the big banks. My "non-profit" credit union also haven't raised their savings rates but they have raised their loan rates. When I went through this high inflation before in the 80s I could put money in CDs that paid 10 to 14% interest. Now the best I can get is around .5 or .7% if you want to tie your money up for a year. It just makes stocks that pay 3 to 5% dividends very attractive in spite of the risk. To me a bigger risk is making .5% on your money with 8 to 10% inflation.
Wow. Fascinating. Great video thank you.
Nice work you putting out there 💯
Appreciate that
I think when he’s “banks won’t raise rate unless you demand it” spoke from his heart and general experience
Big facts!
Like this guy.
👍 keep up the good work.
Will do!
this dude is unbelievably smart (whole another level of intellectual )
I like the visuals. The bank should be called Bling Bank: we got the bling and you don’t.
You are very good at explaining this. Thank you for your time
Agreed
Im thinking of stashing a few stacks in a credit union...
I also think that banks are now paying opening bonuses for new accounts, $225 for Chase, $300 for Truist, for example, and taking their current customer for granted. Also new financial companies like Current are offering 4% interest. Plus Treasury Direct is offering 7% on I Bonds and those are more accessible than they used to be.
Great explanation!
My Amex savings acct is increasing its interest as rates go up. It’s at 1.65% now
Thank you for talking about this. Everyone acts like it's no big deal.
Great video. It'd be good to point out that holding cash and cash equivalents aren't really meant to earn returns but rather just serve liquidity purposes.
That's true now. But the point of the video is that it hasn't always been this way.
Yeah but that's not what's happening now. If savings earned 0% returns that would be great but it's being stolen from those who earned it in the past.
People will not want to volunteer to be a future slave when their savings from their current labor is stolen from them by printing worthless money
Savvy investors are just moving their money to the banks that offer the higher savings rates.
There’s not enough demand for loans okay, but why don’t commercial bank use their clients savings to buy US treasury bonds ? Is it a liquidity issue ?
Because they can’t guarantee people won’t need their money before the bond matures
They do. Along with other things. Banks only need to hold about 10% of their customers' deposits at a given time, so liquidity is not the main issue.
How do you demand higher rates. You and friends take it out set it in your safe on the same day and watch rates rates go higher ;)
How does one ‘demand’ a higher rate? We start smashing things?
No. You pull your money out of the place giving you a low interest rate and put it somewhere with a higher one.
@@DionRabouinWSJ Ah ok I understand. What if the difference is only like 0.5% though?
Better question why don’t savers get a piece of the investments the banks are making?
Banks don't like to share 😆
@@DionRabouinWSJ 🤣🤣🤣 nice answer
You hit it right on the head. Untill Americans start demanding more interest, the banks wont do it. People have gotten so used to being abused by banks, they have normalized it. Great video.
Thank you!
Exactly. People just act like it's no big deal but it's WRONG! Also it used to be really easy to buy US Savings bonds.
How do we make that demand?
When baby boomers die off
Time to buy some bonds.
Subscribed, love your style. Can ordinary people buy US bonds like the banks do? If not, what’s the closest option to that?
Yes
My credit union today,just offered,4.0% for 15 mos,or 4.5% for 27mos.Better than nothing,still garbage.Thats not a savings or checking,it's a tie up contract.
What credit union is that? I'd take that rate all day. You're right that's a CD rate, so you're getting paid to give up access to the capital, but even my "high-yield" savings account is only paying 1.2% these days.
@@DionRabouinWSJ PEN financial credit union,ontario canada
I found out early enough that it’s next to dumb to keep a savings account
They looted enough!
If banks are flooded with money why they are charging high rates of interest on cards 😐
The high rates on credit cards are basically the same as the low rates on savings accounts. Banks set the rates and since people are willing to accept credit cards with high rates banks charge high rates
Also credit cards are unsecured debt lent by the bank, whereas you're lending money to the bank when you have a savings account.
What can we do to make banks listen? Take our money to credit unions instead?
That's really the only way - take your money out of banks. If there's no incentive for them to raise rates, why not keep taking our money and earning 30x returns on it?
Banks pay interest on 56 things; savings, annuity, bonds or anything "grouped" together to create an asset load of earnings demand to create a coalition of dire, deprived event situations to seclude their lives from the plural parks of gestation villaging.
I refinanced to a low risk first lien HELOC and then I took all my savings that wasn’t invested and paid down my principal. I basically, I only have a couple thousand in the bank.
So instead of having my cash devalue by inflation, I’m saving all the interest by the principal pay down.
If you have a fixed rate loan it is best to pay your minimum payment. I have a 30yr mortgage at 2.8% which is lower than the current inflation rate. Combine that with a 12% average return on your money from the S&P500 and you are much better off in the long run investing your money rather than paying heavily on your principal. But I'm not saying what your doing is wrong. It is never "wrong" to pay off your house early! I used to try to do the same until I learned that a loan is one of the best things during high inflation!
@@andybulldog79, yes your stragegy of using debt to maximize investing is a good one. It does come with more risk. For example, if something like great recession of 2008 happens, you will be high debt and down to 50% for a 5 year period before the market comes back to where it was.
I found with my debt pay down strategy, without having a mortage payment, I could retire early. I have rental property paying form a lot of my expenses.
This is another strategy people are using. For folks who are homeowners and more risk averse this can be a good strategy.
@@SuperKillroy1 @Killroy both strategies are great. Just depends on personal preference. But I would never find myself in high debt. My mortgage is well below 20% of income. I have just found in my experience that putting an extra 1k/MO down on principle doesn't seem to be as good as allocating that money to an investment account. I plan on purchasing my father's business in 5-10 years so I need to save up and invest instead of paying down debt. Whenever I do that the interest rate could be 8% or higher so I'd rather put money towards that loan than my mortgage at 2.8%.
@@SuperKillroy1 I am debating between buying a home to hedge against inflation and rising housing costs, vs investing through the market slump to retire early (or change careers, which is more likely what I would do)
Just watching a 'Waltons' episode and I know it's fiction but with research done on life in the 1930s...the father, John Walton speaks to Liv about putting $25,000 into a bank savings account to earn 4% per year!!!
they make more money you put your money in there funds
where'd the perm go
Perm?
@@DionRabouinWSJ sorry i meant afro haha, I rememeber you had one in one of your recent vids
I remember when, as a banker, I was refunding a customer a few $36 overdraft fees and after I got off the phone the branch manager (who sat next to me) said: “40% of you paycheck is bank fees.”
Really thought it was mostly loan revenue.
Worse that pablo escorba. At least he paid them from his revenues...not so cheap after all
Yeah. At some banks fees actually account for a majority of their profits. That's one benefit of big banks - since they make most of their money investing customers' deposits they're more willing to refund fees to keep customers happy.
Indian banks offer 7-8%
Interest rates are much higher in India. The government is less trusted to make payments and its population is too young to demand a lot of bonds.
THAT IS WHAT PITCHFORKS ARE FOR!
So dont keeps your money in the bank
Jon Stewart just made this video a few days ago WTF
Weird. I wrote an article about it a few months ago, so I'm pretty sure I was still first 😂
@@DionRabouinWSJ being first at writing an article about it doesn’t make you first at making a RUclips video about it so no you stole from Jon Stewart and that’s bad so you’re bad!
@@chrisrodgers4950 Actually Jon Stewart did a segment on his show that was turned into a RUclips video. So he never made a RUclips video. Therefore I am first and good and I win.
@@DionRabouinWSJ the moment he takes a clip from the show and creates a RUclips video with it is the moment he made a RUclips video about it, so yes he did make a RUclips video about and it came before yours. His video has more views because he beat you to making a RUclips video about savings accounts.. but at least you wrote that article!
Cryptoooooo
this guy is speaking in a way that makes me think slower…. and slooooower….. and i can’t focus
This is why my cash sits in stablecoin. Getting between 7-15%apr. Fuck the banks. Crypto is the future.
Let's Go Brandon!
Who is Brandon?