You’re not the only one seeking more return on your cash from your bank. Despite interest rate increases initiated by the Federal Reserve, banks have been slow to increase interest paid to savers. Non-bank players like Fidelity Investments are the beneficiaries of bank inaction, with money market accounts paying owners close to four percent. The Wall Street Journal’s Rachel Louise Ensign explains:
Wealthy savers are starting to take their cash out of bank accounts in search of higher yields.
Big banks are still paying paltry interest on checking and savings accounts despite the Federal Reserve’s steepest rate increases in decades. Their wealth-management customers are done waiting: They are moving the extra savings they accumulated during the pandemic into products whose rates have more closely tracked the Fed.
The typical savings account is paying a 0.33% interest rate, according to the Federal Deposit Insurance Corp. Treasury notes, money-market funds and brokered certificates of deposit, meanwhile, are all paying between 4% and 5%.
“Every time the Fed hikes, the opportunity cost of leaving idle cash in low-yielding accounts increases,” said Jason Goldberg, an analyst at Barclays PLC. “You’re seeing consumers who have extra cash being proactive with it.”
E.J. Smith - Your Survival Guy
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