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Fed raised interest rates 5 times since 2015. Banks havent raised deposit rates

hehe maybe soon! Higher Deposit Rates May Finally Be Com...
Indigo domesticated knife
  03/19/18
...
Gold arousing pervert
  03/19/18
banks dont survive on customer deposits anymore, they surviv...
Gold arousing pervert
  03/19/18
Mfcr
Slimy chartreuse library
  03/19/18
...
learning disabled mischievous principal's office mad-dog skullcap
  03/19/18
thanks obama!
Indigo domesticated knife
  03/19/18
Marcus is giving me 1.5% and fucking my wife too
Brilliant Wonderful Area
  03/19/18
really great to live in a time where wages for jobs--the one...
flatulent market
  03/19/18
Hehe
costumed karate public bath
  03/19/18


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Date: March 19th, 2018 3:46 PM
Author: Indigo domesticated knife

hehe maybe soon!

Higher Deposit Rates May Finally Be Coming to Your Bank Account

With Fed poised to raise interest rates a sixth time, savers so far have seen few rewards

The average rate on a one-year certificate of deposit rose to 0.49% last week, according to a personal-finance website. While that’s peanuts by historical standards, it is the highest in more than seven years.

The average rate on a one-year certificate of deposit rose to 0.49% last week, according to a personal-finance website. While that’s peanuts by historical standards, it is the highest in more than seven years. PHOTO: MICHAEL BUCHER/THE WALL STREET JOURNAL

By Christina Rexrode

March 19, 2018 5:30 a.m. ET

52 COMMENTS

Is the sixth time the charm? The Federal Reserve has raised short-term rates five times since late 2015, but banks largely stood pat on deposit rates for rank-and-file customers. Now, with the Fed expected to lift rates again this week, there are signs this could change.

The average rate on a one-year certificate of deposit, or CD, rose to 0.49% last week, according to Bankrate.com, a personal-finance website. While that’s peanuts by historical standards, it is the highest in more than seven years, and the march upward has quickened after the most recent Fed moves.

Banks over the past year have already raised the interest paid on deposits held by businesses and affluent individuals who demand it. But their tentative foray into higher CD rates is more about trying to get ahead of average customers’ demands.

It’s a tricky calculation. Banks don’t want to pay more than they have to, but they also don’t want to keep deposit rates so low that customers eventually leave.

“This is the biggest story that investors and bankers are going to talk about for the next two years,” said Gerard Cassidy, an analyst at RBC Capital Markets, “after a period of eight or nine years of not even worrying about it.”

Falling Behind

Deposit rates haven't kept up with the FederalReserve's rate hikes.

Sources: Bankrate.com (CDs), Federal Reserve (FedFunds)

Note: Fed-funds rate represents top of target range.

%

One-Year CD

Fed-Funds Rate

2014

’15

’16

’17

’18

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

Getting the payment rate right is crucial. Banks use deposits to fund loans, and they make money by paying out less on deposits than what they charge on loans. Paying higher deposit rates increases costs, potentially crimping profits.

But if enough depositors take their business elsewhere, that can hamper a bank’s ability to make more loans. That, in turn, could hurt revenue.

So far, banks have succeeded with a cautious approach. Although loans are growing at a slower pace than this time last year, the industry’s lending-related income has been rising throughout the Fed’s rate-raising cycle.

Related Video

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Overall net-interest income for U.S. banks rose 8.5% in the fourth quarter from a year earlier, according to Federal Deposit Insurance Corp. data, a quicker clip than the 7.6% increase in the year-ago quarter. Meanwhile, growth in banks’ deposit expenses has been unusually slow.

The biggest banks are still flush with deposits, which exceed their loans. That makes them less inclined to rush to increase rates.

But Mr. Cassidy and other analysts think banks could soon be competing for deposits. Among other reasons, some small and regional banks already are trying to gather more deposits and could raise rates. For banks, CDs are an appealing way to test raising rates for consumers. Since they have fixed terms, usually from one month to a decade, CDs let banks lock in rates so their entire deposit base doesn’t reprice with each Fed increase. They also make it easier for banks to create longer-term loans.

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They aren’t the easiest sell to consumers, though, since many don’t want to lock up their money while rates are expected to keep rising. Others can’t be bothered. “I think there is still a relative indifference,” KeyCorp CEO Beth Mooney said in an interview.

M&T Bank Corp. is experimenting with higher rates on some one-year CDs after a previous pitch on five-year CDs didn’t gain much traction. But Chief Financial Officer Darren King said in his experience, customers only start to notice when the fed-funds rate rises to about 3%. (The fed-funds target, now at 1.25% to 1.5%, is widely expected to be raised by a quarter percentage point on Wednesday.)

This rate-raising cycle is different from the last one, from 2004 to 2006. Accustomed to a decade of ultralow rates, customers so far seem apathetic about chasing rates, even though technological advances have made it easier to move money.

Gary Zimmerman, founder of MaxMyInterest, which matches bank customers with higher-yield bank accounts, said his clients tend to be uninterested in CDs. “If they want to lock up their money, they’ll do it in a way where they can get a higher return,” such as real estate, Mr. Zimmerman said.

Higher consumer prices could eventually sway some customers to search for better deposit rates, said Greg McBride, chief financial analyst at Bankrate.com. When the Fed raised short-term rates in December 2015, the annual inflation rate as measured by the consumer-price index was 0.7%. In February annual inflation stood at 2.2%.

“They’re not seeing that in their savings account,” Mr. McBride said, “but they are when they’re shopping at the grocery store.”

Slower Rise

Cumulative rise in one-year CD rate from lowbefore Federal Reserve rate-hike campaign,measured after each increase

Source: Bankrate.com

Note: Fed raised target rate by 1.25 percentage pointsin both periods.

2004

2015-2018

Hike 1

Hike 2

Hike 3

Hike 4

Hike 5

0pct. points

0.25

0.5

0.75

1

1.25

Still, banks aren’t moving en masse to raise rates. The average rate on a money-market deposit account, which is a widespread type of savings account, started at 0.10% before the rate-raising cycle and is now at just 0.15%, Bankrate.com says.

The banks that have raised deposit rates are mostly online and smaller lenders. And banks are still moving slowly. In the last tightening cycle, the average yield on a one-year CD rose 1.15 percentage points during the Fed’s first five rate moves, as measured from its low point before the increases. In this cycle, CD rates have risen just 0.27 point, according to Bankrate.com.

Ryan Easton, an IT consultant in Louisville, Ky., was tired of waiting for higher rates and recently switched from a local lender to Ally Financial Inc., an online bank offering more attractive rates. Mr. Easton, 30 years old, was hesitant at first and hasn’t been able to persuade his parents to follow suit.

But now Mr. Easton jokes that the only thing he misses about going to a bank branch is the lollipops. “With the interest-rate difference,” he said, “I could probably order my own.”

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35638985)



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Date: March 19th, 2018 3:52 PM
Author: Gold arousing pervert



(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639042)



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Date: March 19th, 2018 3:53 PM
Author: Gold arousing pervert

banks dont survive on customer deposits anymore, they survive on fed printing, so there's no real incentive for banks to raise rates to attract customers and compete with other banks for customers' business.

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639048)



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Date: March 19th, 2018 3:54 PM
Author: Slimy chartreuse library

Mfcr

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639063)



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Date: March 19th, 2018 3:55 PM
Author: learning disabled mischievous principal's office mad-dog skullcap



(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639072)



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Date: March 19th, 2018 3:59 PM
Author: Indigo domesticated knife

thanks obama!

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639112)



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Date: March 19th, 2018 3:56 PM
Author: Brilliant Wonderful Area

Marcus is giving me 1.5% and fucking my wife too

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639073)



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Date: March 19th, 2018 4:00 PM
Author: flatulent market

really great to live in a time where wages for jobs--the ones that haven't been automated yet, anyway--have been gutted relative to inflation, costs to get those jobs are skyrocketing in order to pay admin leeches, and once you make ur pittance from those jobs, banks no longer need to compete for consumer money so u get to put it in the fraudlie$ $tock market if you don't want it shrunk to nothing by inflation

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639130)



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Date: March 19th, 2018 4:02 PM
Author: costumed karate public bath

Hehe

(http://www.autoadmit.com/thread.php?thread_id=3922996&forum_id=2#35639144)