Interest rates have risen, mortgage rates are double and car loans are up roughly 30% since December 2021. So why isn't my bank paying me a higher interest rate?
I get this question almost daily and it's justifiably frustrating. Everybody seems to be taking more but no one's willing to pay you more. So what gives?
According to an article in the Wall Street Journal this week the answer is more basic than you think. Essentially, the banks don't need your money and they're not willing pay you for it.
According to the St. Luis Federal Reserve, as of September 2022, cash deposits at all commercial banks in the United States sits at an all time high $18 Trillion. In fact, that is a spike of $5 Trillion more than pre-COVID.
So what does that mean for savers and investors? It means we need to look elsewhere. However, investor beware! The more we start "chasing" interest rates the wider you cast your financial profile. My personal opinion, that can increase your exposure to bank fraud and identity theft.
A better alternative would be locking in short-term US Treasury bonds. As of today (October 7th, 2022) properly structured short-term ladder can provide us upwards of 4% with little downside risk.
To learn more about US Treasuries, click this link and schedule time for us to #walkandtalk it through.