America’s savings rate shame: Three biggest US banks raked in $200BILLION from higher interest rates on loans last year – yet refuse to raise 0.01 percent yields for savers

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Written By Maya Cantina
  • Wells Fargo, Bank of America and JPMorgan Chase made $200 billion on higher interest rates in 2023
  • But all three banks offer just 0.01 percent interest on their savings accounts
  • Do you feel ripped off by banks? Tell us about it at money@dailymail.com 
  • Federal Reserve voted to hold rates steady at their current 22-year-high

America’s three biggest banks raked in nearly $200 billion from higher interest rates last year – yet have failed to pass on bigger yields to savers.

The Federal Reserve’s relentless tightening cycle has taken interest rates to a 22-year high – boosting the amount JPMorgan Chase, Bank of America (BofA) and Wells Fargo can charge on loans to customers.

But analysis by DailyMail.com shows that all three have failed to raise the annual percentage yield (APY) on their basic savings accounts beyond 0.01 percent.

By comparison, those same banks typically charge between 5 and 7 percent interest on their 30-year fixed-rate mortgages.

The firms have been put to shame by a host of smaller providers who now offer yields as high as 5 percent on standard savings accounts.

America’s three biggest banks raked in nearly $200 billion from higher interest rates last year – yet have failed to pass on bigger yields to savers

In an earnings call last year JPMorgan CEO Jamie Dimon admitted the company was 'overearning' on so-called Net Interest Income (NII) - the difference between what banks earn on loans and pay out in deposits. He cautioned 'we're going to have to change savings rates'

In an earnings call last year JPMorgan CEO Jamie Dimon admitted the company was ‘overearning’ on so-called Net Interest Income (NII) – the difference between what banks earn on loans and pay out in deposits. He cautioned ‘we’re going to have to change savings rates’

For example, fintech firm SoFi – which requires no minimum deposit – has a 4.6 percent APY on its accounts – 460 times as much as Wells Fargo, Chase or BofA.

It means a saver with $1000 in their account would have earnt $46 interest by the end of a year with SoFi – but just 10 cents with any of the other three banks.

Earlier this month it was revealed that JPMorgan Chase had made the biggest annual profit in the history of US banking after it netted $49.55 billion.

Its earnings report shows much of this was driven by so-called Net Interest Income (NII) – the difference between what banks earn on loans and pay out in deposits. 

For the whole year, the firm made $89.7 billion in NII, up 34 percent from 2022. BofA earnt $57.5 billion in NII while Wells Fargo raked in $52.4 billion.

In an earnings call last year JPMorgan CEO Jamie Dimon acknowledged the firm was ‘overearning’ on NII and cautioned ‘we’re going to have to change savings rates.’

However, it has so far failed to do so on its basic accounts. 

It comes after it emerged Capital One is being sued over misleading savings interest rate – after customers learned they were earning just 0.3 percent instead of more than 4 percent they thought they were getting.

Personal finance experts said big banks have no incentive to raise rates as they do not need to entice new custom.

Greg McBride, from personal finance site Bankrate, told DailyMail.com: ‘The biggest banks have the largest share of the market and with market share comes pricing power.

‘These banks don’t increase their savings rate because they don’t need to. But fortunately for consumers there are a lot of smaller banks who will welcome them with open arms and competitive rates.’

McBride said most savings account providers require no minimum balance. He recommended that customers stick to accounts which are insured by the Federal Deposit Insurance Corporation (FDIC). 

George Kamel, author of Breaking Free from Broke and co-host of Dave Ramsey’s radio program the Ramsey Show, warned savers that banks are ‘not their friend’ and advised they seek out better returns elsewhere.

Earlier this month it was revealed that JPMorgan Chase had made the biggest annual profit in the history of US banking after it netted $49.55 billion

Earlier this month it was revealed that JPMorgan Chase had made the biggest annual profit in the history of US banking after it netted $49.55 billion 

The Federal Reserve 's relentless tightening cycle has taken interest rates to a 22-year high - boosting the amount JPMorgan Chase, Bank of America (BofA) and Wells Fargo can charge on loans to customers

The Federal Reserve ‘s relentless tightening cycle has taken interest rates to a 22-year high – boosting the amount JPMorgan Chase, Bank of America (BofA) and Wells Fargo can charge on loans to customers

This week Fed Chair Jerome Powell confirmed that the body was holding interest rates steady at their current range of 5.25 to 5.5 percent

This week Fed Chair Jerome Powell confirmed that the body was holding interest rates steady at their current range of 5.25 to 5.5 percent

He told DailyMail.com: ‘Regardless of the interest rate, savings accounts are not a wealth building tool. 

‘That’s what long-term investing is for. When it comes to emergency savings, I recommend having 3 to 6 months of expenses in your emergency fund. Treat your emergency fund like insurance, not an investment.’

Banks are preparing for interest rates to be slashed up to four times this year as the Fed’s tightening cycle final comes to an end.

Fed Chair Jerome Powell confirmed during January’s meeting that the body was holding interest rates steady at their current range of 5.25 to 5.5 percent.

But Moody’s Analytics still expects a rate cut in May, with a further three to follow before the end of the year. 

It means banks will likely take a hit to their NII earnings in 2024 after a bumper year in 2023. Wells Fargo said it expects a 7-9 percent decline in NII this year.

Spokesmen for both Wells Fargo and JPMorgan Chase pointed out that they offer Certificate of Deposit (CD) accounts offering more competitive rates. 

CDs are less flexible than standard savings accounts as they often incur a penalty if a customer want an early withdrawal.

Wells Fargo said rates on its three-month standard fixed rate CD is 4.5 percent while its seven-month fixed-rate CD provides 4.75 percent APY.

JPMorgan Chase said: ‘We currently offer interest rates of up to 5 percent on CDs. Unlike savings accounts, CDs typically are more attractive for long-term savings and are viewed by our customers as a better alternative.’

Bank of America also offers CDs with rates up to 5 percent. The firm declined to comment when contacted by DailyMail.com. 

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