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Relevant recent Levine article on this from last week: https://www.bloomberg.com/opinion/articles/2024-08-07/ai-companies-almost-get-bought https://www.bloomber

by loeg 2y ago

Relevant recent Levine article on this from last week: https://www.bloomberg.com/opinion/articles/2024-08-07/ai-companies-almost-get-bought https://www.bloomberg.com/opinion/articles/2024-08-07/ai-com... > Cash sweep sweep > If you go to a bank and say “I’d like to open an account and deposit some cash,” they will happily open a checking account for you, take your cash, and pay you an interest rate that is, in round numbers, zero. [4] (My checking account pays 0.01%.) If you say “no, I want a savings account, because those have higher interest rates,” they will happily open a savings account, take your cash, and pay you an interest rate that is … also 0.01%? Maybe 0.03%? But if you utter the correct series of incantations, at least some banks will open a high-yield savings account and pay you 5% or more. You gotta find the right bank, though, and utter the right incantations. Sometimes it’s tricky. > ... > People pretty regularly complain about this — “interest rates have gone up, why doesn’t my bank pay me more?” — and sometimes they even do something about it (they move their money to another bank that pays more, or to a money market fund). But the banks do not particularly get in trouble for it. Regulators understand that banks need cheap funding, and that if they can get cheap funding they’re supposed to take it. [5] > If you go to a brokerage firm and say “I’d like to open an account and deposit some cash while I wait to find some good stocks to buy,” they will happily open an account for you, take your cash, and … well! They will probably pay you some interest rate that is higher than 0.01% and lower than 5%. They would prefer to pay you less, because brokerage firms also mainly make money by getting paid more interest on their cash than they pay you on your deposits. [6] Some brokerages advertise “we pay a really high rate on cash,” and thus attract customers who want to get paid a high rate on their cash. Others … don’t? Others advertise, you know, “we will give you good financial advice” or “we make trading fun” or “we have a good app” or whatever, and they get people who do not pay attention to how much they will get paid on their cash. > On the other hand, there’s a sense that your broker has some fiduciary duty to you, or ought to, particularly if your broker is also giving you financial advice. If your broker is telling you what stocks to buy, she should probably also mention “hey, you have a bunch of money sitting idly in your brokerage account, and we’re paying you like 1%, but you could just put it into a Treasury money market fund that is essentially cash but pays 5.4%.” That would cost her firm money — it would give up your cheap cash — but would be good customer service. > Is it mandatory? Eh, maybe a little: (Links to the similar article, https://www.ft.com/content/de751907-c870-4b8c-b86b-317483f7626f https://www.ft.com/content/de751907-c870-4b8c-b86b-317483f76... )

lotsofpulp 2y ago
> But if you utter the correct series of incantations, at least some banks will open a high-yield savings account and pay you 5% or more. You gotta find the right bank, though, and utter the right incantations. Sometimes it’s tricky Searching the internet for “list of highest interest bank accounts” with the device in your pocket is apparently a tricky incantation. Shopping an entire country’s investment options has never been easier, and still there are complaints.
- 0cf8612b2e1e 2y ago
  Just because it is possible to navigate through the dark patterns does not mean we should be comfortable with the situation. I do not have the time nor expertise in every facet of my life to know if I am getting a raw deal.
  - lotsofpulp 2y ago
    So what do you want, the government to mandate every aspect of your life? Obviously, the government should be offering constitutionally protected and inalienable electronic money accounts that pay the same interest the banks get paid. But that is not in the cards right now, so spending a few minutes, or maybe an hour at most reading a couple websites about which bank pays the most is really not much to ask. It’s called shopping, and it’s how a market works. Markets don’t really work if market participants evaluating which sellers are offering better value.
  - deleted 2y ago
    [deleted]
- TeMPOraL 2y ago
  As if interest rate was the only important variable when evaluating bank accounts. Banks have plenty of ways to make money on unaware customers - or rather, to make it expensive in time and effort to avoid losing money on things like transaction fees, account fees, card fees, etc., many of which are waived if you deposit and/or spend the right amount of money in the right order through the right financial instrument in the right cadence. (Not to mention, every bank has a godawful shitty app, and there's some serious opportunity cost in learning how to cope with the new kinds of shittiness of your new bank.)

by loeg 2y ago

lotsofpulp 2y ago

> But if you utter the correct series of incantations, at least some banks will open a high-yield savings account and pay you 5% or more. You gotta find the right bank, though, and utter the right incantations. Sometimes it’s tricky Searching the internet for “list of highest interest bank accounts” with the device in your pocket is apparently a tricky incantation. Shopping an entire country’s investment options has never been easier, and still there are complaints.

0cf8612b2e1e 2y ago
Just because it is possible to navigate through the dark patterns does not mean we should be comfortable with the situation. I do not have the time nor expertise in every facet of my life to know if I am getting a raw deal.
- lotsofpulp 2y ago
  So what do you want, the government to mandate every aspect of your life? Obviously, the government should be offering constitutionally protected and inalienable electronic money accounts that pay the same interest the banks get paid. But that is not in the cards right now, so spending a few minutes, or maybe an hour at most reading a couple websites about which bank pays the most is really not much to ask. It’s called shopping, and it’s how a market works. Markets don’t really work if market participants evaluating which sellers are offering better value.
- deleted 2y ago
  [deleted]
TeMPOraL 2y ago
As if interest rate was the only important variable when evaluating bank accounts. Banks have plenty of ways to make money on unaware customers - or rather, to make it expensive in time and effort to avoid losing money on things like transaction fees, account fees, card fees, etc., many of which are waived if you deposit and/or spend the right amount of money in the right order through the right financial instrument in the right cadence. (Not to mention, every bank has a godawful shitty app, and there's some serious opportunity cost in learning how to cope with the new kinds of shittiness of your new bank.)