51M. As a child I had a children’s saving account with compound interest. My $100 went up to just below $200 in around 4 – 5 years. That seems like peanuts, but to a kid that was a lot.As a young adult, in the mid 1990s, I remember my older colleagues were talking seriously about CD interest rates to put away for up to five years, at 6%.
Now, in 2024, with the major banks, a one-year CD from Bank of America is 0.03%. Maximum rates for 5 years is 2.5% at Chase, no matter how much money you put away. Savings accounts compound interest rates are 0.01%, max, IF you maintain at least $10,000 in the account.Yet interest rates for a housing loan are at 7% and putting housing purchases out of reach. How can the banks do this?
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In: Economics
The simple answer is that most people don’t shop around. If you’re one of the 5 or so big banks and no one is leaving over the 0.01% interest rate you’re paying, why offer more?
Be a smarter consumer than the banks give you credit for. Wealthfront Cash is paying 5.0% right now and there are [lots of other banks](https://www.nerdwallet.com/m/banking/standout-online-savings-accounts-2) offering 4.5% or better.
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