When was the last time you checked your savings account? If it’s been a while, I’m sure that you were expecting a big, juicy return. Guess what? You’re probably severely disappointed to find out that you’ve made almost nothing.
Banks often pay low-interest rates on savings accounts, not mention the checking accounts. In May 2022, the national average interest rate is 0.07 percent and inflation is around 8.5 percent.
Financial institutions profit from having higher borrowing rates than the rates they pay people who deposit money into savings accounts. And, this is one reason why savings account rates are so low. Another reason? Some banks may not need to offer higher interest rates is that they’ve already attracted a large number of customers and aren’t competing aggressively for new customers, according to research conducted by Itmar Drechsler, a professor of finance at the University of Pennsylvania….