Due to the rising interest rates for bank accounts, I started checking. I learned that banks do not increase interest rates across all their customers money. I wanted to share my experiences in case it helps anyone else not to lose money. I won’t be listing any detail, just enough for someone to do some research. We also have bank accounts that are not local, this is because of the best interest rates and ones I really like. When choosing a non-local bank, a lot of research is done, and one of the requirements is a bank being established for at least 20+ years.

Here is what I did to increase our interest rates on our money in the banks.

Bank 1, this is a local bank. I found we were only getting .02% interest. I spoke with one of the representatives. I let them know I was getting 3.25% from my other banks. They said they have a ‘match the rate’ program going on and I just needed to provide evidence. I did and we are now getting 3.25% interest. This is a money market account, so it could go lower, but in the meantime, we are making money – at least some of what the bank was already making.

Bank 2, non-local. I had assumed we were OK since it was advertising 3.25% on their savings account, but it wasn’t. When I called, I was told it was because I was in an older account category. So key word here is “Older Account”. A bank will create new kinds of categories for the savings or money market accounts with the increased rate, but will not increase the rate on their existing accounts. Hence money was moved to the newer account. So, our money went from .80% to 3.25%. What is nice is this is savings account and not as vulnerable as the money market, especially with today’s ups and downs.

Bank 3, semi-local. I had no idea on this, because they weren’t advertising any large interest rates, so I called and spoke to someone that let me know there was a higher interest rate, and our money went from 1.75% to 4.08%. I need to say the new account was more like a CD, although they don’t call it that.

I see signs that the bank’s interest rates will not keep increasing and most likely go down. When looking at CDs, I’m mostly seeing the highest rate being on the 1 year CD and the rate goes down as the length of the CD goes up – very unusual. Anyway, try to get what you can when you can.

This all made me wonder. A bank makes money by investing/lending their (customers) money. So are they investing/lending the lower rate customer’s money into high yielding investments/loans or do they hold this money aside and only invest into very low interest rate investments. My guess is the former.

Really interesting - glad you shared this.

Gia

Thanks for the post. Because the banks have been slow to raise their rates, I started using the US Treasury site: treasurydirect.gov to purchase treasury bills (short term US government notes). The treasury auctions notes to the banks and investment companies, and gives you the same rate. (This morning, the interest rate on 8 week notes was 4.6%.) Minimum investment is $100, maximum $10,000,000; durations 4 weeks to 1 year. When you create an account, you tie it to your bank account, and the treasury takes the money for the notes, then returns it to your bank when the note matures.

Obviously not for everyone, but may be worth considering.

You can also buy savings bonds and other government securities through the site

Excellent topic, gia58! One should never assume all is well with any bank/money market/fund for extended periods. It's rather discouraging that a bank would not appreciate long term customers but would give them less service and interest on their "older" accounts". I guess they realize most of us wouldn't check rates as closely as you did very often to see if we're getting the best deals.

That sounds interesting bfrank. I went to treasurydirect.gov and think that's too complicated for me.



I would have to do a lot of research to see what the benefits and risks are and how long term purchases are good now or not. But I'm sure other Pinecammers would understand all those better than me. So thank you for the information, even if it's too complicated for me.

I was looking at 1 year fixed investments and found a huge difference in CD rates. I found Chase has a 1 year CD returning 3.00% on a 5k investment, while Colorado Federal Savings in Greenwood Village is offering 4.75% on the same investment terms. I think there's a couple credit unions paying close to 5.00%. It pays to shop around.

TillerBee- I used TreasuryDirect.gov last year to purchase I Bonds. The web interface may look a bit archaic, but it's pretty easy to use. I set up an account and transferred funds from my bank for the purchase and had no problems.

Thanks, great info bFrank! I will definitely be looking into - TB prepared me for the complicated (not surprised since it’s a Government site - me bad..lol) and Taranis gave me hope… lol

Oh by the way, Yesterday Federal Reserve just raised rates by 1/4 point, so get out there and get these increases. They are saying they expect ongoing increases, so hopefully I’m wrong about it not lasting.

I agree with Taranis about the archaic website (select something with a radio button and click submit ... etc.), but it is not really difficult. If you search "how to buy bills on treasury direct" you will get several articles and videos with detailed instructions.

I originally assumed you had to have quite a bit of money to buy government notes, so was really surprised by the $100 minimum (maximum kind of irrelevant).

On a related not I was looking at CD's at 1'st bank. I do not recall the #'s but the one year rate was more than twice the 5 year.