Hacker News Reader

Not sure if is the same, but I noticed that account interest rates that went down when the reserve rates went down didn't go back up. We opened up accounts for our kids at a local credit union that had close to 0% interest. Fast forward 2 years and the rates are just as bad or worse. Savings accounts are 0.25% compared to >4% at other credit unions.

View on HN

It makes sense for interest rates to go down when the reserve rate is cut. That means there are more dollars to buy bonds with pushing up the price and lowering the yield (the inverse relationship between price and yield is a mathematical identity). Eurodollar rates are routinely lower than us dollar rates, and they don't have any reserve requirements.

Credit union deposit rates are usually tied to how much they need deposits, as opposed to what prime/sofr/fed are at. Credit unions whose lending isn’t keeping up with deposits (which is especially common in smaller CUs) will keep rates low to avoid paying a bunch of interest of funds that they can’t use productively.

Reply on news.ycombinator.com