Are Banks a Good Option?

Not only the US, but the World, has been experiencing a number of banking catastrophes – Wells Fargo, Bank of America, JP Morgan Chase, Citigroup, UBS… Jeff Ivory and Thad Schlaud have recently commented on some of these catastrophes and how they have impacted your money. Today, I would like to take a quick look at the basics of bank economics and their impact on your hard-earned money. While there is often a significant positive return on the money a bank holds, customers rarely see the returns produced by their bank-held assets.

FOR A $15,000 SAVINGS ACCOUNT

3.01% – what banks earn on your money¹
0.06% – what you earn on a savings account ²
0.04% – what you earn on a checking account ²

Bottom Line
Banks earn $451.50/yr on your $15,000; while you receive a measly $9.00/yr on your money held at the bank.

If you have any questions, we are here to help.

¹ Net Interest Margin for all U.S. Banks – Q2 2016 – https://fred.stlouisfed.org/series/USNIM
² The “National Rate” as a simple average of rates paid by U.S. depository institutions as calculated by the FDIC. The national rates and rate caps for various deposit maturities and sizes are provided below. Savings: 0.06, interest checking: 0.04 – https://www.fdic.gov/regulations/resources/rates/

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