Now that the demand for loans is basically tapped out — even as lending standards relax ever so slightly – banks seem to have found a new way to screw with their customers. A savings account at an American bank now offers little more than the tiniest sliver of interest. Banks are rewarding financial discipline — and compensating depositors for parking their cash in savings accounts — at record-low rates, according results of a study by Market Rates Insight published by Bloomberg. The national average for interest on checking, savings, CDs and money market accounts stand a 0.99%, down from 5.69% a decade ago.
Market Rates Insight attributes the downturn in interest-rate payments to a rise in unemployment. With less economic activity going on, and lower demand for loans, banks need fewer deposits, so they aren’t paying up to encourage people to save with them.
Bloomberg reports that a New York savings account at Bank of America, for example, pays 0.4% on deposits below $10,000 and 0.85% on deposits of more than $500,000. A savings account at Citibank can pay up to a 0.7% annual rate. Bank of America’s Anne Parr told Bloomberg, “Our rates are reflective of the current environment and consistent with the industry.” Small comfort to savers, but hey, there’s always the trusty old mattress. Add the coins you serendipitously find in the couch, and you’re pretty close to the payout offered by national banks.