10 ms·

Unless I'm completely ignorant of what's out there, 3% interest on a free personal checking account is absolutely bonkers. I can only imagine everyone in /r/ch

• trq_ 8y ago
  I guess I'm a bit naive, why is this?
  • MrL567 8y ago
    Interest rates for banking accounts for quite some time have been low. 3% is very high for the USA so it' s a pleasant surprise for many people.
    • novaRom 8y ago
      Also 3% is astronomical for Euro zone. Here you typically have 0.01-0.1% on saving accounts (only for 100k Euro and below), and negative rate on checking accounts (most people usually pay 7-12 Euro per month for checking accounts and 20-40 Euro per year for Visa card).
      • zeroname 8y ago
        ...which is appropriate when "risk-free" government bonds hover near zero percent. The US 10-year is on the other hand is near 3%.
      • hocuspocus 8y ago
        It's not a fair comparison. Interest rates have bounced back (to some extent) and interchange fees are quite a bit higher in the US. I haven't checked everywhere in the eurozone but a lot of major banks have online brands/products that are typically free. You should be able to have at least a checking account and a debit card without paying any fees. "Neobanks" are also a lot more developed than in the US: see N26, Revolut, Ferratum, ... Savings accounts yield nothing, but that has nothing to do with retail banks :) That said, you can find fixed-term deposits between 1 and 2%: https://www.raisin.com/ https://www.raisin.com/
      • nawitus 8y ago
        You can get around 0.8% in Euro zone, but your local bank is unlikely to offer that.
  • LandR 8y ago
    My checking / current account pays less than 1% and that's only on the first £2500 (I think), after that the interest is zero. I'd love a checking account, with no fees that pays 3% on the whole balance. My average balance on my current account is around £20k. My interest would be £600 a year at 3%, as opposed to £25 or so I get now.
    • ansible 8y ago
      What's stopping you from opening up similar accounts with other banks?
      • dec0dedab0de 8y ago
        They don't exist
      • LandR 8y ago
        Most banks that will give you a current account will want to see £xxxx deposited every month (e.g, your salary) to earn any interest (if they even offer interest, it's rare on a current account). I could open multiple, but then every month I'd need to spend time transfering money to each to earn the interest. Im not sure that would even count towards deposited every month, they might want to see a direct debit that is actually a salary. I'm not sure. Further, I have an ISA (which is the UK tax free saving accont), that earns under 1% too and I'm limited to £20k a year into that account. I have another account that pays ~2.x% per year, but on that one I'm limited to £250 a month. Interest rates are abysmal right now in the UK.
        • ansible 8y ago
          Some workplaces can split your direct deposit from payroll into multiple accounts. _If_ you can hit the deposit limits that way. The bank doesn't need to know it is not your entire salary.
        • vidarh 8y ago
          The time isn't an issue - you can set up standing orders yourself with most UK online banking sites. If they require a direct debit that's another matter.
  • williamscales 8y ago
    There's a slew of online-only banks out there currently offering accounts with around 2% interest. Banks that have a brick-and-mortar presence have a lower margin so they offer lower interest rates.
• thisone 8y ago
  When banks in the UK have offered 3% (Tesco bank did this) it was for the first 12 months and the number of new accounts was eventually limited. from what I understand Tesco bank had purchased bonds/securities/whatevs with a 5% interest rate, so made 2% off the deal. (and a slew of new customers worth x each to the bank) Hopefully something similar is funding this
  • notahacker 8y ago
    Santander offered 3% up to £20k to all customers on their main checking account but had to cut that rate in the end.
    • C1sc0cat 8y ago
      They had some sweet deals I was making just under £20 a month on cash back plus a good (for the time) interest rate. But the half baked eu ruling on merchant fees screwed savvy investors and the banks found another way to charge merchants.
  • benj111 8y ago
    Tesco's 3% is ongoing, it is limited to £1500 though, I've had one for 5? Years. Was only guaranteed for 12 months, and guaranteed it again when they had their security breach a few years back. They have limited account opening at various times though.
  • nimish 8y ago
    3% in the UK on GBP is different from 3% in the US on USD. You can't really compare them.
    • thisone 8y ago
      3% is 3%. 3% on £100 = £3. 3% on $100 = $3. If both banks invest in whatevs (local currency) paying 5%, then they get 5%, pay you 3% and make 2%. Are you trying to reference relative inflation? Or something about the USD makes it difficult to invest?
• justaguyhere 8y ago
  my dad used to get > 10% rate (not US, and yes, it was much higher than inflation rate). Now we think 3% is bonkers. How times have changed!
  • EpicEng 8y ago
    I don't know where you're located, but in the US, interest rates used to be much higher. So yes, you got great rates on savings accounts, but you also paid 8%+ on your mortgage.
    • jdhn 8y ago
      Housing prices were lower in both absolute and inflation adjusted terms, so the higher interest rate didn't hurt as much.
• sailfast 8y ago
  Federal Reserve rates have been steadily increasing for awhile, and LIBOR is above 3% short term. If they use this depository capital influx to loan money to options / future traders on their own platform they'll make money, and they won't be paying it to other institutions. 30 year US treasuries are now also above 3%, and we may see that continue with shorter-term instruments so there's a hedge there as well.
• mherdeg 8y ago
  It's slightly above the best nationally available current rates (2.5% APY -- https://www.fragiledeal.com/t/best-nationally-available-high-apy-liquid-accounts/2349 https://www.fragiledeal.com/t/best-nationally-available-high... ). It will be interesting to see if they * maintain a 0.5% spread above the best nationally available rate as rates rise elsewhere as an ongoing customer-acquisition cost * just stick to 3% even as other banks raise their rates higher over time, assuming that 3% is good enough and their product is sticky enough that people won't move
• therealdrag0 8y ago
  Ally has 2% now. I've been very happy with them.