The gradual rise in interest rates has been a boon for banks, but a bane for their customers.
The Federal Open Market Committee’s tightening monetary policy is already expected to cost consumers around $6 billion in extra interest charges in 2017, according to a recent report by personal finance website WalletHub, but the interest paid on deposits in savings accounts has barely budged.
According to WalletHub’s credit card and banking “Landscape” reports, online-only savings accounts provide the market’s highest interest rates, yielding an average of 0.81 percent annually. By comparison, a two-year CD yields an average of 0.77 percent, according to the study, while personal branch-bank checking accounts yielded an average of 0.39 percent.
Brick-and-mortar banks seem to be discouraging long-term savings, writes WalletHub, by offering higher yields on checking accounts than on savings accounts. The research found that the average branch-based checking account offers yields 175 percent higher than the average traditional savings account.
WalletHub says that credit card interest rates are at their highest point since the firm began tracking the data in the third quarter of 2010. In the third quarter of 2017 alone, the average credit card APR rose by 26 basis points.
Since the Fed began raising rates in 2015, credit card interest rates have increased by 101 basis points, while savings account APYs have increased by a mere 19 basis points.