7 ms·

I guess I'm a bit naive, why is this?

by trq_ 8y ago

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.

I guess I'm a bit naive, why is this?

by trq_ 8y ago

I guess I'm a bit naive, why is this?

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.