bank rates

Don’t Waste Your Savings On Too-Bad-To-Buy CDs From The Too-Big-To-Fail Banks

My personal immersion in what the nation’s top CDs are paying on any given workday isn’t normal. I realize I’m on the far end of a spectrum here. (Call it an occupational hazard.)

Most savers only pay attention to deposit rates when there’s a transaction to conduct, like socking away some surplus that’s built up in a checking or savings account, or choosing a new CD for rolling over a maturing certificate’s funds.

That makes perfect sense, and it’s why many of you visit Bankaholic.

But there’s one thing I have a hard time making sense of, and that’s the evidence that another distant end of the continuum exists: savers who pay so little mind to reasonable rates of return for their savings that they’re willing to buy CDs offered by the nation’s biggest banks.

JP Morgan Chase, Bank of America, Wells Fargo and Citi – the Big Four, or Too-Big-To-Fail banks – have for years paid rates that are utterly uncompetitive in the CD marketplace.

Exactly how bad are these “big bank” rates? Calling them abysmal is almost too generous.

As you can see, the rates offered by all of the big banks, across all of the terms, are pummeled by the national average yield, according to Bankrate’s weekly survey of thousands of banks and thrifts across the nation.

In fact, the national average outperforms the best of the four bank yields by 54% on the low end (3-year CDs) and 128% on the high end (6-month CDs).

As damning as that might be, it gets worse, because Bankaholic readers know that national average rates are themselves shamed by what a saver can find when shopping the top national yields, as shown on our CD Rates Leaderboard.

Compared with the highest yield attainable from the Big Four, the top nationally available bank yields pay a staggering 345% to 800% better.

How much money does that equate to? Let’s take one example, of $10,000 invested for three years.

Invest it at Chase or Citi for 0.35% APY, and you’ll have $10,105 when your 36 months are up.

Invest that same ten grand with EverBank or E-Loan at 1.85% APY, and you’ll walk away with $10,565, or $460 more, simply for shopping around.

Not only is the gap hard to believe, but it doesn’t even take the next jaunt down the road, of comparing it with the best credit union and community bank CDs, which regularly outdo even the top-paying banks.

So why would a saver lock money into any of these big bank CDs?

One obvious reason is convenience.

For anyone who has their checking or savings account at one of the Big Four (and that’s a lot of Americans), the easiest and fastest way to move money into a CD is to do it at the same bank.

But there’s another reason, and that’s lack of awareness. Some savers simply don’t know how much more they could earn with just a small amount of shopping around.

That’s where Bankaholic comes in, keeping savers up to date on the latest top deposit rates so you can earn as much as possible on your money.

And the verdict is clear – big bank CDs offer nothing of value to even a moderately informed saver.

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  1. James K said:
    on January 10th at 04:11 pm

    Banks do not need to pay “higher” rates for CDs b/c the larger banks make their income from the fees! When “we” quit using their card cards, etc. that pay them fees, their interest rates will increase…”they want their bonus!”

  2. Sheila said:
    on January 11th at 06:43 am

    Credit unions have been offering superior rates/promotions for the past few years..some are surprisingly easy to join..definitely pays to shop around