If the fed interest rates are rising why aren't ours?

[Celia Moore]

Seems like something fair would be self-explanatory, but I can't think of any reasons. Would be nice to actually get some interest on our own money! 

[Joe Splitrock]

@Jai Reddy thanks, it appears I misread the question. 

The reason savings account interest rates have not increased is that banks have an excess of money. That is mainly due to the pandemic, which resulted in massive government stimulus and payment freeze programs. On top of extra money coming in, expenses reduced because people stayed at home. They didn't go on vacation, out to concerts, to the store shopping or out to the restaurant. This left people with massive amounts of cash, which they could either spend or invest. Many put their money in the bank, which has left banks with high cash reserves. Simply put they don't need cash, so the rates reflect that. Also consider that lending rates have only recently began to increase, so there is some lag time to see all the effects. It is fair to say over time that savings interest rates will increase. For example, back in 2018 when I got a 4.5% 30 year mortgage on an investment property, I was getting close to 2% in my high yield savings. Still not very high all things considered. The Feds monetary policy makes it unlikely we will see savings account interest rates like we did in the 1980's or 1990's, when 8% to even double digits was common. As a nation we used to reward savers, but we now punish them. This is done intentionally, because spending is what makes the economy strong, so politicians want you to spend every penny you make. Strong economy means re-election.