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Clickbait title, the fed rate went from 0.25% to 0.5% hardly soaring. Savings accounts previously paid like 0.04% according to article, that's because they need

Clickbait title, the fed rate went from 0.25% to 0.5% hardly soaring. Savings accounts previously paid like 0.04% according to article, that's because they need margin and they can keep them low cuz people won't swap banks for half a percent (not that it'll get there anytime soon)

marcosdumay 5y ago
> hardly soaring It's double the previous rate. I don't understand why central banks always use fixed increment sizes.
- PopAlongKid 5y ago
  Maybe for the same reason why gasoline in U.S. is usually priced in increments of $0.10 as the performance rating goes up (although that seems to be less of a rigid rule lately where I live)? Or maybe for ease of predictability? After all it is much easier to make a binary choice between two numbers with a fixed interval between them, than to choose an intermediate value to the Nth degree.
  - marcosdumay 5y ago
    They can use hyperbolic sized increments with the same predictability they get on constant sizes.
- Rastonbury 5y ago
  Predictability, they don't want to introduce too much volatility.
gotaquestion 5y ago
Doubling equals soaring in anything related to economics or finance.
- Rastonbury 5y ago
  Nah man 0.001% to 0.002% really? Would anyone describe the yield of t-bonds as astronomical at 1.44%? Nobody would even care if banks passed on fed rate to consumers, imagine getting the joy of getting 0.5% up from 0.25%
  - Spooky23 5y ago
    I wonder what happens when rates return to more historical territory? Perhaps we’ll adopt shrimp marketing. “Mortgage rates are now jumbo collassal!”
PopAlongKid 5y ago
For most of the last decade, IRS statutory rate for underpayment/overpayment of tax was 3%, an historically low number. It briefly spiked up to 6% in 2019, then fell back to 3% for a while, but last quarter went back up to 4%, with more increases expected.[0] This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. [0]https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp/table-of-underpayment-rates https://www.dol.gov/agencies/ebsa/employers-and-advisers/pla...
- gruez 5y ago
  >This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. Yeah but you're severely limited in how much money you can "save" in this account. Similarly, it's like arguing that rates are super high because you can get I-bonds at 7.12%, but neglecting to mention the most you can buy per year is 10k.
  - PopAlongKid 5y ago
    I wasn't really suggesting it as a savings vehicle, rather I was contrasting how a neutral government rate is going up significantly while banks are still stubbornly sticking to their artificially low savings rates.
  - toomuchtodo 5y ago
    The fixed rate of those bonds is zero [1], that’s important to remember. The inflation adjustment they pay means your cash invested won’t lose value, not that you’re generating real return. [1] https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#rate https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
- SnowHill9902 5y ago
  It’s not a zero-risk rate, it’s just a “reasonable rate which is painful enough to make you prefer paying than not paying while at the same time not seeming too high as to be abusive”. Why are late fees $350, $450 or whatever? It’s not a real cost of anything. It’s just a reasonable fee.
JumpCrisscross 5y ago
> Clickbait title It's a (granted, well deserved) PR piece for Goldman Sachs. Their "popular consumer bank Marcus" is called out early for "offering individuals a yield in excess of 2%" in 2019. Its 50 bps is then compared to "Bank of America Corp.’s 0.04% or JPMorgan Chase & Co.’s 0.02%."
- mgh2 5y ago
  Yes, it may very well be an advert for Marcus. A product marketing manager's next steps in the AIDA sales funnel would be: A - Attention: This piece highlights the context and problem at hand to the general population. Priming them with major player's brands is key to awareness. I - Interest: Will follow up with a piece titled "Marcus considers rising interest rates amid inflation" comparing the highest interest rates with competitors. This anticipation and speculation creates further interest. D - Desire: Finalize with "Marcus decides to raise interest rates to 1.3%" higher than other competitors to "stay competitive". A - Action: Announce a "limited time offer" to further entice people to open an account - ex: $100 cash for new accounts. https://en.wikipedia.org/wiki/AIDA_(marketing) https://en.wikipedia.org/wiki/AIDA_(marketing)
- PaulDavisThe1st 5y ago
  Marcus' savings rate shifted on friday from 0.5% oto 0.6%.
- toomuchtodo 5y ago
  Would you say this speaks to the stickiness of savings accounts, in that there is no deposit account ACATS equivalent and folks won’t go through the effort of moving institutions to maximize savings returns?
  - JumpCrisscross 5y ago
    > there is no deposit account ACATS equivalent There sort of is: wires and EFTs. The simple answer may be, for many savers, the spread is irrelevant. If you're saving for a home over a year [1], the difference between earning zero and 80 bps on e.g. $100,000 (quarter of the median home sales price [2]) is no more than $800. If these are your only savings, having them at an institution you know and trust may be worth sacrificing $800 over. (I'd argue it isn't. But I can imagine someone getting stressed over it.) If you're saving for the longer term, e.g. in a rainy-day fund or for retirement or broadly for asset accumulation, you're thinking like an investor and out of the domain of basis-point yields. [1] More realistically, if you're a median household earning $67,500 [a] saving 10% a year for a home, deposited monthly, one would have $100,027 after 168 months (~14 years) at 0.8% and $100,125 after 178 months (~15 years) at 0%. That's a difference. But not a practically meaningful one. [a] https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N [2] https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS
anm89 5y ago
mortgage rates have doubled in the last two months, the 20 year has doubled in the last two months, rhe policy rate had doubled in the last two months (admittedly a small nomination amount) and is about to double again in a week. so although overall rates are still low, I think it's pretty fair to say they have exploded
- Spooky23 5y ago
  “Doubled” from rock bottom. The government flooded the zone with cash to keep the economy alive. Hell, I’m paying a 2.25% interest rate on my home. People are running around like chickens about inflation this and inflation that. The only meaningful metric is gas prices.
  - meissler 5y ago
    Have you gone grocery shopping lately?
  - MisterMower 5y ago
    For a guy who bought a house with a loan at 2.25%, gas prices might be the only meaningful metric. Not everybody is as lucky as you, bud. People are watching the value of their savings evaporate before their very eyes as they try to put together down payments for a home or find a minivan for their growing family. It’s a real problem, and if you want to see what a world where it doesn’t get fixed quickly looks like, go read the book “When Money Dies.” Pretending it doesn’t exist won’t fix it either.
    - Spooky23 5y ago
      I’m not saying it’s not a real problem. It’s a symptom of long standing issues that have been kicked down the road for my lifetime. I grew up in a farm town where 30 farms circa 1990 are down to 4, and the factory in the next town employs 80% fewer people. The nations strategy for dealing with this has been to suppress the business cycle with endless cheap cash. IMO, it won’t get better until it gets worse.
danhak 5y ago
The yield on the 1 year t-bill has gone from 0% to 2% That’s where I’ll be keeping cash I’d otherwise keep at the bank, for now.
- baremetal 5y ago
  except rates are gonna keep going up, meaning your principle would decline in value.
  - ericd 5y ago
    If you're keeping it to term, the only issue is the 1 year of opportunity cost - you get your full principal back at the end. But if your alternative was to keep it in a savings account at a bank, there's no opportunity cost.
- bombcar 5y ago
  Grabbing some I Bonds could be worth it.
  - deleted 5y ago
    [deleted]
  - danhak 5y ago
    I'm already maxed out at $10,000 for this year.
    - Asparagirl 5y ago
      Got kids? Look up “minor” accounts. Got an LLC or a family trust of some sort? Look up “entity” accounts.
      - abnercoimbre 5y ago
        So I can purchase bonds as an individual and also as the owner of my LLC?
throwawayboise 5y ago
> the fed rate went from 0.25% to 0.5% hardly soaring That's a 100% rise in interest rates, which many people would call "soaring".
- Rastonbury 5y ago
  It is to people who are unaware of the context, which BBG is using to try to sensationalise. The same rate was 2.25% in 2018, and there may be up to 6 hikes of 25bps each this year alone. The fed rate is going to "soar", it just hasn't yet

marcosdumay 5y ago

> hardly soaring It's double the previous rate. I don't understand why central banks always use fixed increment sizes.

PopAlongKid 5y ago
Maybe for the same reason why gasoline in U.S. is usually priced in increments of $0.10 as the performance rating goes up (although that seems to be less of a rigid rule lately where I live)? Or maybe for ease of predictability? After all it is much easier to make a binary choice between two numbers with a fixed interval between them, than to choose an intermediate value to the Nth degree.
- marcosdumay 5y ago
  They can use hyperbolic sized increments with the same predictability they get on constant sizes.
Rastonbury 5y ago
Predictability, they don't want to introduce too much volatility.

gotaquestion 5y ago

Doubling equals soaring in anything related to economics or finance.

Rastonbury 5y ago
Nah man 0.001% to 0.002% really? Would anyone describe the yield of t-bonds as astronomical at 1.44%? Nobody would even care if banks passed on fed rate to consumers, imagine getting the joy of getting 0.5% up from 0.25%
- Spooky23 5y ago
  I wonder what happens when rates return to more historical territory? Perhaps we’ll adopt shrimp marketing. “Mortgage rates are now jumbo collassal!”

PopAlongKid 5y ago

For most of the last decade, IRS statutory rate for underpayment/overpayment of tax was 3%, an historically low number. It briefly spiked up to 6% in 2019, then fell back to 3% for a while, but last quarter went back up to 4%, with more increases expected.[0] This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. [0]https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp/table-of-underpayment-rates https://www.dol.gov/agencies/ebsa/employers-and-advisers/pla...

gruez 5y ago
>This rate applies to anyone who takes "too long" to claim a refund or pay a tax liability, so it is basically a zero-risk rate that applies to everyone regardless of their credit status. Yeah but you're severely limited in how much money you can "save" in this account. Similarly, it's like arguing that rates are super high because you can get I-bonds at 7.12%, but neglecting to mention the most you can buy per year is 10k.
- PopAlongKid 5y ago
  I wasn't really suggesting it as a savings vehicle, rather I was contrasting how a neutral government rate is going up significantly while banks are still stubbornly sticking to their artificially low savings rates.
- toomuchtodo 5y ago
  The fixed rate of those bonds is zero [1], that’s important to remember. The inflation adjustment they pay means your cash invested won’t lose value, not that you’re generating real return. [1] https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#rate https://www.treasurydirect.gov/indiv/research/indepth/ibonds...
SnowHill9902 5y ago
It’s not a zero-risk rate, it’s just a “reasonable rate which is painful enough to make you prefer paying than not paying while at the same time not seeming too high as to be abusive”. Why are late fees $350, $450 or whatever? It’s not a real cost of anything. It’s just a reasonable fee.

JumpCrisscross 5y ago

> Clickbait title It's a (granted, well deserved) PR piece for Goldman Sachs. Their "popular consumer bank Marcus" is called out early for "offering individuals a yield in excess of 2%" in 2019. Its 50 bps is then compared to "Bank of America Corp.’s 0.04% or JPMorgan Chase & Co.’s 0.02%."

mgh2 5y ago
Yes, it may very well be an advert for Marcus. A product marketing manager's next steps in the AIDA sales funnel would be: A - Attention: This piece highlights the context and problem at hand to the general population. Priming them with major player's brands is key to awareness. I - Interest: Will follow up with a piece titled "Marcus considers rising interest rates amid inflation" comparing the highest interest rates with competitors. This anticipation and speculation creates further interest. D - Desire: Finalize with "Marcus decides to raise interest rates to 1.3%" higher than other competitors to "stay competitive". A - Action: Announce a "limited time offer" to further entice people to open an account - ex: $100 cash for new accounts. https://en.wikipedia.org/wiki/AIDA_(marketing) https://en.wikipedia.org/wiki/AIDA_(marketing)
PaulDavisThe1st 5y ago
Marcus' savings rate shifted on friday from 0.5% oto 0.6%.
toomuchtodo 5y ago
Would you say this speaks to the stickiness of savings accounts, in that there is no deposit account ACATS equivalent and folks won’t go through the effort of moving institutions to maximize savings returns?
- JumpCrisscross 5y ago
  > there is no deposit account ACATS equivalent There sort of is: wires and EFTs. The simple answer may be, for many savers, the spread is irrelevant. If you're saving for a home over a year [1], the difference between earning zero and 80 bps on e.g. $100,000 (quarter of the median home sales price [2]) is no more than $800. If these are your only savings, having them at an institution you know and trust may be worth sacrificing $800 over. (I'd argue it isn't. But I can imagine someone getting stressed over it.) If you're saving for the longer term, e.g. in a rainy-day fund or for retirement or broadly for asset accumulation, you're thinking like an investor and out of the domain of basis-point yields. [1] More realistically, if you're a median household earning $67,500 [a] saving 10% a year for a home, deposited monthly, one would have $100,027 after 168 months (~14 years) at 0.8% and $100,125 after 178 months (~15 years) at 0%. That's a difference. But not a practically meaningful one. [a] https://fred.stlouisfed.org/series/MEHOINUSA646N https://fred.stlouisfed.org/series/MEHOINUSA646N [2] https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS

anm89 5y ago

mortgage rates have doubled in the last two months, the 20 year has doubled in the last two months, rhe policy rate had doubled in the last two months (admittedly a small nomination amount) and is about to double again in a week. so although overall rates are still low, I think it's pretty fair to say they have exploded

Spooky23 5y ago
“Doubled” from rock bottom. The government flooded the zone with cash to keep the economy alive. Hell, I’m paying a 2.25% interest rate on my home. People are running around like chickens about inflation this and inflation that. The only meaningful metric is gas prices.
- meissler 5y ago
  Have you gone grocery shopping lately?
- MisterMower 5y ago
  For a guy who bought a house with a loan at 2.25%, gas prices might be the only meaningful metric. Not everybody is as lucky as you, bud. People are watching the value of their savings evaporate before their very eyes as they try to put together down payments for a home or find a minivan for their growing family. It’s a real problem, and if you want to see what a world where it doesn’t get fixed quickly looks like, go read the book “When Money Dies.” Pretending it doesn’t exist won’t fix it either.
  - Spooky23 5y ago
    I’m not saying it’s not a real problem. It’s a symptom of long standing issues that have been kicked down the road for my lifetime. I grew up in a farm town where 30 farms circa 1990 are down to 4, and the factory in the next town employs 80% fewer people. The nations strategy for dealing with this has been to suppress the business cycle with endless cheap cash. IMO, it won’t get better until it gets worse.

danhak 5y ago

The yield on the 1 year t-bill has gone from 0% to 2% That’s where I’ll be keeping cash I’d otherwise keep at the bank, for now.

baremetal 5y ago
except rates are gonna keep going up, meaning your principle would decline in value.
- ericd 5y ago
  If you're keeping it to term, the only issue is the 1 year of opportunity cost - you get your full principal back at the end. But if your alternative was to keep it in a savings account at a bank, there's no opportunity cost.
bombcar 5y ago
Grabbing some I Bonds could be worth it.
- deleted 5y ago
  [deleted]
- danhak 5y ago
  I'm already maxed out at $10,000 for this year.
  - Asparagirl 5y ago
    Got kids? Look up “minor” accounts. Got an LLC or a family trust of some sort? Look up “entity” accounts.
    - abnercoimbre 5y ago
      So I can purchase bonds as an individual and also as the owner of my LLC?

throwawayboise 5y ago

> the fed rate went from 0.25% to 0.5% hardly soaring That's a 100% rise in interest rates, which many people would call "soaring".

Rastonbury 5y ago
It is to people who are unaware of the context, which BBG is using to try to sensationalise. The same rate was 2.25% in 2018, and there may be up to 6 hikes of 25bps each this year alone. The fed rate is going to "soar", it just hasn't yet