Where does YOUR money sleep at night?

February 13, 2023

2022 earnings season for US publicly-traded companies is underway, and, as always, it has been very interesting to follow.  During the earnings call of one of the big banks, the CEO’s comment about their net interest income floored me:

“$560 billion in consumer deposits… were in low or no interest-bearing checking accounts that collectively paid an average yield of 0.06%, or 3.66% percentage points below the average Fed Funds target rate during the quarter.”

OK, so to translate this, the big bank’s CEO is boasting about how much interest they are NOT paying to their customers/depositors. Essentially, the bank is earning Fed Funds (3.72%) on customer deposits while paying its customers a measly 0.06%. The spread between these two rates was the big bank’s profit on these deposits. Lots to comment on here from many angles. Could the big banks be any more tone-deaf?

In a nutshell, if you are holding cash with the big banks, it is likely they are paying you essentially nothing on your deposits! We are happy to help clients move their funds to Schwab, Fidelity, and Flatirons Bank – where we can get money market interest rates of approximately 4.50%!!! Quite a step up from 0.06%! Imagine that, getting paid interest on YOUR money, what a concept!

As the saying goes, if you rub two Nickels together long enough, you can make a Quarter! 😊



David Wolf, CEO



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