General Discussion

Amishman

(5,896 posts)

5. Because the interest they pay would would increase their cost of funds for the loans they issue

Tue Nov 1, 2022, 12:09 PM

Nov 2022

Cost of funds is a expense for the bank on the lending side of the house. Customer deposits, especially those that don't earn much or any interest, is the cheapest and most desirable source of funds for their lending.

If you are content to leave money in a savings account, they'll happily oblige and make money lending out those deposits.

This is not unique to for-profit banks, credit unions operate the same way.

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With the Fed raising interest by 4 points in the past 9 months [View all] maxrandb Nov 2022 OP

You should check CD rates vs the regular accounts... Historic NY Nov 2022 #1

Bank rates should change. I have an account with... brush Nov 2022 #2

CD rates are up, which is nice. ananda Nov 2022 #3

my credit union has CDs listed at 3% MissB Nov 2022 #4

+1 CountAllVotes Nov 2022 #9

So you must keep for a year, ideally over 5 and I assume keep indefinitely after that? themaguffin Nov 2022 #13

You could keep it up to 30 MissB Nov 2022 #14

Because the interest they pay would would increase their cost of funds for the loans they issue Amishman Nov 2022 #5

I remember when banks paid 5% for a standard savings account Fiendish Thingy Nov 2022 #6

My credit union is paying 1.7% CountAllVotes Nov 2022 #7

Because savings rates can't go below zero FBaggins Nov 2022 #8

Thanks for all the good info maxrandb Nov 2022 #10

GO to a professional Johnny2X2X Nov 2022 #11

Thanks maxrandb Nov 2022 #12

Why is YOUR bank paying you 0.01% on savings account? brooklynite Nov 2022 #15

It smells like Bank of America! CountAllVotes Nov 2022 #16