Why Are Bank Savings Interest Rates So Low?

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

[DionRabouinWSJ]

Do you know what interest rate or APY you’re earning on your current savings account? Is it higher than 0.06%?

[OWG]

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.

[__________]

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.

[KaiTakApproach]

Prime Time Dion doing the good work again.

[tswagdiddy]

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!

[ev.c]

Same here in Denmark. Actually we have to pay to have our money standing on a savings account.

[lexsmith]

My boy pulled up with the shades and the gold chain lol!!!! Love it!

[ericjones]

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.

[captainoblivionthicc]

You are very good at explaining this. Thank you for your time

[jeffreybarker]

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.

[chuckspessard]

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.

[jbeals]

I have found myself looking forward to your videos! I always learn so much!🤘🏼

[jamsonren]

I think when he’s “banks won’t raise rate unless you demand it” spoke from his heart and general experience

[matthewpourroy]

My Amex savings acct is increasing its interest as rates go up. It’s at 1.65% now

[ironuckles]

Great explanation. I am enjoying your channel.

[Boogey_Man_]

this dude is unbelievably smart (whole another level of intellectual )

[keithrob]

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.

[takatsu]

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.

[gurubazu]

The Allen Iverson(AI) of financial journalism! Thanks for this explainer! Now on how to be a savvy investor :-)

[eguy]

Great video, a lot more going on there then I first thought!