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W2ttsy t1_jeetq02 wrote

Reply to comment by Celtic_Legend in "No REALLY, we're doing fine" ~ every bank right now by JPowsSecretlover

Man what is going on with your banks where interest rates are still this low with such high inflation?

Here in Australia 4.25% is about the average savings interest you can get on any standard bank account. Higher if using fixed term deposits or saver accounts.

I mean I’ve got my money parked in an offset account on my mortgage netting me a guaranteed 6.09% return (more if there are further rate rises) and far less volatile than anything I could buy on the ASX or NASDAQ.

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Celtic_Legend t1_jeeuvdb wrote

My guess is that getting a full 6-8%+ return with less customers is more profit than retaining customers by offering 4% and making 2-4%.

Small banks are happy to offer 5% right now though. Bank of america and chase are offering essentially 0% which are the 2 biggest banks. Cba googling more.

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tjonesmachine93 t1_jeh225l wrote

Because banking is sticky. People are more reluctant to change banks than cell phone providers. Consider a big bank like BofA with $2T in deposits. Let’s assume 1/3 is just going to be your average Joe or Joe’s plumbing with 10-20k in checking accounts and another 20k in an emergency savings account. Those accounts are yielding 0.02% currently and have been (or less) for a while. So the price to service these accounts is 130M annually. If they were to just automatically pay a competitive 3-4%, that 130M goes to $20B. They know they are too big to fail and if they experience a run the fed will are in, which they have already. Large banks have literally no reason to pass along a good interest rate to customers bc, frankly, they don’t want their deposits.

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Trest43wert t1_jefjejx wrote

Bank bond portfolios are filled with low interest bonds from a few years ago. They are stuck with them and are unable to pay more yield given how their bonds are positioned. Its a death spiral.

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