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Comment by anigbrowl | Hacker News Reader

I wonder if this is partly the outcome of banks declining to offer any sort of meaningful ROR on savings accounts? Bank of America (for example) is offering 0.01%, although this rises to a whopping 0.04% for super-preferred customers. Yet they want $8/month to service the account unless there's a minimum balance of $500. Meanwhile, their mortgage rates start at 6.37%.

https://www.bankofamerica.com/deposits/savings/savings-accou... https://www.bankofamerica.com/mortgage/fixed-rate-mortgage-l...

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I'm baffled by how chase, bofa and the big retail banks have any customer at all who keep saving accounts with them. There literally doesn't seem a point other than to donate about 3% of that total to them each year in lost income. Or get short term Tbills for 4%.

There's a ton of reputable larger online banks giving 2.5 to 3% interest. Having a chase, wells fargo, or bofa savings account with 0.0X% is unfortunate. They are just preying on older or less financially savy customers.

I'm at one of these for the following reasons: 1) It's effectively free when you make sure to meet their conditions like minimum balance, have a direct deposit, enable overdraft protection 2) it's a short walk to the local branch, where I can talk to a human, 3) their web site and mobile app are both great.

American banking system never ceases to disappoint me. Overdraft fees! What kind of mustache twirling Disney villain came up with that?

And to have the gall of touting "overdraft protection" as though it were some sort of feature and not the solution to the problem they themselves invented

how much are you paying them in lost interest each year?

And yes, I have a checking account at one of the major banks, I also have a savings account that I keep zero money in because it was opened at the same time decades ago. Having a checking account doesn't seem to be a rip off, my money lands there and then transfers to better pastures. I just don't understand keeping any money in their savings account.

Like if I kept my emergency fund there rather than in a couple online banks, I'd basically be paying the retail bank $800+ a year. Sounds like a scam.

What do interest rates offered by the banks have to do with liquidity in the bond market?

The Fed speculates that the reason for the lack of liquidity is due to uncertainty about the economic outlook and uncertainty about the interest rates. The evidence they point to is that liquidity (defined by the bid/ask spread and the amount of available bonds at the best price) is lower for short-term bonds compared to long-term bonds. Short-term bonds are more affected by interest rate changes, so market participants are much more cautious about transacting in a large number of bonds at once. Rather, they split large purchases into many small purchases to ensure they're not losing money due to sudden changes in the price.

Banks offer 3% and above now.

https://www.nerdwallet.com/m/banking/standout-online-savings...

CDs as high as 3.6%

https://www.marcus.com/us/en/savings/high-yield-cds

Still much lower than the inflation though.

It's a different set of banks. I've got a high-yield online-only savings account that paid 2% or so last time I checked. I've also got a checking account with a brick & mortar bank that pays something like 0.01%, and the savings and money market options at that institution aren't much better.

So? Move your money to the one that pays higher APY.

You're missing the point that B&M banks still have a great deal of market share. https://wallethub.com/edu/sa/bank-market-share-by-deposits/2...

That's just what the large incumbent brick-and-mortar banks have done for a decade - because anybody still using them as a primary bank clearly doesn't know better.

Meanwhile, the major online banks have been sending emails announcing interest rate increases like every single week.

There is a large set of infrequently encountered (for most) but often highly important and/or time-sensitive things that having a traditional bank you can walk into makes much easier.

Consider: medallion signature guarantee, initiating an arbitrarily large sized wire to an arbitrary recipient, cashing a physical check where the payee and indorsement doesn't match automatic remote-deposit scrutiny, cashing a particularly large cashier's check, getting cash above an ATM withdrawal limit (even from another bank or in another country, in some cases), working around a stated policy, etc.

Online-only, mobile-only, and neo-banks basically say "eh" to these corner-case services. But a branch manager, even if they may not personally recognize you, will have surprising leeway and willingness to solve problems if they look at the CRM and see you're a longtime customer in good standing with some modicum of deposit / activity over time. Not so for a rando.

It's been very worth my while to forego a couple % in interest income for the annual "need an institution to help me fix this today" tax.

(But yeah, keep the corpus in something that will pay you.)

I completely agree about the features of brick and mortar banks. My complaint specifically is about letting the large chain banks dominate your view. For example, BoA seemingly has the gall to charge a monthly fee on a savings account.

I'm lucky to have a competitive market for local banks that hasn't (yet) been completely borgified, and I do keep an account / safe deposit box [0] at one and use them for many of the things you mentioned. If you don't have any independent banks around, there is the common advice to look for credit unions instead.

I actually do keep an account at BoA too. It's the only link to another account that would be a huge hassle change out. Their ATM network is nice, the automated cash deposit feature on their ATMs is one of the easier ways to get available funds into the banking system on short notice, and I can stand keeping the $2k minimum balance for now. But still, they've got to be kept on a short leash.

[0] It's an inexpensive place to store external hard drives for rotating backups.

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