Finding high interest on savings accounts rates nowadays is pretty difficult, which is why many are surprised that they can still find some either online – or maybe at their local credit union. But why is this happening? Why can you still find decide rates despite the Federal Reserve’s decision to lower the target rate? Let’s look at a few reasons and pinpoint more closely were you might find the highest rates on savings accounts.
Why Did High Interest Rates Lower?
Many savers have been scratching their heads in wonder as to why rates that sat as high as 5% or more had to drop to as low as 1% or lower. In general, the target rate from the Federal Reserve lowered and many banks followed suit. What’s the reason? The economy shook up any security in the financial market, leaving banks more desperate than ever to hold on to their reserves. As a result, high interest rates dropped on savings accounts, which helped funds to remain liquid.
Why Are Some Rates Still Higher?
So if many banks are only offering lower rates, why is it possible to find high interest rates here and there? With online accounts, the possibility of finding better prices rests in the online bank’s ability to cut overhead. Think about it; if you don’t have a building to maintain and tons of employees to pay, you have more wealth to share. The same goes for local credit unions. While there are buildings to maintain, the money is distributed differently because there may only be one office in the area – that and credit unions don’t follow the exact same guidelines as banks.
So if you’re looking for high interest rates on savings accounts, you’ll fair well by checking with your local credit union. But because online banks offer the highest rates, and are the easiest to research, you might want to try this route first.