America’s savings rate shame: Three biggest US banks raked in $200BILLION from higher interest rates on loans last year – yet refuse to raise 0.01 percent yields for savers

America’s three largest banks collected nearly $200 billion from higher interest rates last year – but failed to pass on greater returns to savers.

The Federal Reserve’s relentless tightening cycle has taken interest rates to a 22-year high – boosting the amount JPMorgan Chase, Bank of America (BofA) and Wells Fargo can charge on loans to customers.

But analysis by DailyMail.com shows that all three have failed to increase the annual percentage return (APY) on their basic savings accounts by more than 0.01 percent.

By comparison, those same banks typically charge between 5 and 7 percent interest on their 30-year fixed-rate mortgages.

The firms have been put to shame by a host of smaller providers now offering returns as high as 5 per cent on standard savings accounts.

America's three biggest banks collected nearly $200 billion from higher interest rates last year - but failed to pass on greater returns to savers

America’s three biggest banks collected nearly $200 billion from higher interest rates last year – but failed to pass on greater returns to savers

JPMorgan CEO Jamie Dimon admitted in an earnings call last year that the company

JPMorgan CEO Jamie Dimon admitted in an earnings call last year that the company “overearned” on so-called net interest income (NII) – the difference between what banks earn on loans and pay out in deposits. He warned ‘we are going to have to change savings rates’

For example, fintech firm SoFi — which requires no minimum deposit — has a 4.6 percent APY on its accounts — 460 times that of Wells Fargo, Chase or BofA.

That means a saver with $1,000 in their account would have earned $46 in interest by the end of a year with SoFi — but just 10 cents at any of the other three banks.

Earlier this month, it was revealed that JPMorgan Chase had made the biggest annual profit in the history of US banking after achieving $49.55 billion.

Its earnings report shows much of this was driven by so-called net interest income (NII) – the difference between what banks earn on loans and pay out in deposits.

For the full year, the firm made $89.7 billion in NII, up 34 percent from 2022. BofA earned $57.5 billion in NII while Wells Fargo collected $52.4 billion.

In an earnings call last year, JPMorgan CEO Jamie Dimon admitted that the firm was “overearning” on NII and warned “we’re going to have to change savings rates.”

However, it has so far failed to do so on its basic accounts.

It comes after it emerged Capital One is being sued over misleading savings interest rates – after customers found out they were only earning 0.3 per cent instead of the more than 4 per cent they thought they were getting.

Personal finance experts said big banks have no incentive to raise rates because they don’t have to attract new customers.

Greg McBride, of personal finance website Bankrate, told DailyMail.com: ‘The biggest banks have the biggest share of the market and with market share comes pricing power.

‘These banks are not increasing their savings rate because they don’t need to. But luckily for consumers, there are many smaller banks that will welcome them with open arms and competitive rates.’

McBride said that most savings account providers do not require a minimum balance. He recommended that clients stick with accounts insured by the Federal Deposit Insurance Corporation (FDIC).

George Kamel, author of Breaking Free from Broke and co-host of Dave Ramsey’s radio show the Ramsey Show, warned savers that banks were ‘not their friend’ and advised them to look for better returns elsewhere.

Earlier this month, it was revealed that JPMorgan Chase made the biggest annual profit in the history of US banking after achieving $49.55 billion.

Earlier this month, it was revealed that JPMorgan Chase had made the biggest annual profit in the history of US banking after achieving $49.55 billion.

The Federal Reserve's relentless tightening cycle has taken interest rates to a 22-year high - raising the amount that JPMorgan Chase, Bank of America (BofA) and Wells Fargo can charge on loans to customers

The Federal Reserve’s relentless tightening cycle has taken interest rates to a 22-year high – raising the amount that JPMorgan Chase, Bank of America (BofA) and Wells Fargo can charge on loans to customers

Fed Chairman Jerome Powell confirmed this week that the body is keeping interest rates steady at their current range of 5.25 to 5.5 percent

Fed Chairman Jerome Powell confirmed this week that the body is keeping interest rates steady at their current range of 5.25 to 5.5 percent

He told DailyMail.com: ‘Regardless of the interest rate, savings accounts are not a tool for building wealth.

‘That’s what long-term investing is for. When it comes to emergency savings, I recommend having 3 to 6 months worth of expenses in your emergency fund. Treat your emergency fund like insurance, not an investment.’

Banks are preparing for interest rate cuts up to four times this year as the Fed’s final tightening cycle comes to an end.

Fed Chairman Jerome Powell confirmed at January’s meeting that the body is keeping interest rates steady at their current range of 5.25 to 5.5 percent.

But Moody’s Analytics still expects a rate cut in May, with a further three to follow before the end of the year.

That means banks are likely to take a hit on their NII earnings in 2024 after a good year in 2023. Wells Fargo said it expects a 7-9 percent decline in NII this year.

Spokespeople for both Wells Fargo and JPMorgan Chase pointed out that they offer Certificate of Deposit (CD) accounts that offer more competitive rates.

CDs are less flexible than standard savings accounts as they often incur a penalty if a customer wants an early withdrawal.

Wells Fargo said rates on its three-month standard fixed-rate CD are 4.5 percent, while its seven-month fixed-rate CD offers 4.75 percent APY.

JPMorgan Chase said: ‘We currently offer interest rates of up to 5 per cent on CDs. Unlike savings accounts, CDs are typically more attractive for long-term savings and are considered a better alternative by our customers.’

Bank of America also offers CDs with rates as low as 5 percent. The firm declined to comment when contacted by DailyMail.com.