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Chase savings account: Why?

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Anonymous
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Chase savings account: Why?

So...I transferred $15k from a savings account earning an APY of 2.10% to a new Chase savings account to satisfy the requirements of a $600 SUB.  Now, regardless of the APY on the Chase account, it's well worth moving my $ there for 90 days.  That SUB is awesome.  I decided to take a closer look at the Chase accounts today in case maybe I'd even stay with them.  Well, once I looked at their current savings account interest rates, I'm left wondering why anyone would keep their money in a Chase savings account!  The rate my money will earn (outside SUB) is 0.01%, and the best possible rate I can find with Chase is a whopping 0.11% for $10,000,000+!?!  If anyone leaves $10,000,000 to languish in a Chase account at that return... there's just no way.

 

This is my first experience with Chase, and my question to all you MF'rs , is this:  Why?  Am I missing something, or are savings account simply not what Chase does?  As in, they are all about credit cards, investment account, and savings are just a "side gig"?  I'm just blown away that they can pay such low rates in this age of internet banking and expect anyone to park their money with them.

 

If they paid an even slightly comptetivie rate I'd probably just leave it there.  At 0.01% I'll be moving it on day 91... unless I'm missing some magical Chase "relatoionship benefit"?

 

Message 1 of 8
7 REPLIES 7
Girlzilla88
Valued Contributor

Re: Chase savings account: Why?

I'm so glad you shared this I got that offer as well and seriously considered it but now I'm glad I didn't.







Message 2 of 8
Anonymous
Not applicable

Re: Chase savings account: Why?


@Anonymous wrote:

So...I transferred $15k from a savings account earning an APY of 2.10% to a new Chase savings account to satisfy the requirements of a $600 SUB.  Now, regardless of the APY on the Chase account, it's well worth moving my $ there for 90 days.  That SUB is awesome.  I decided to take a closer look at the Chase accounts today in case maybe I'd even stay with them.  Well, once I looked at their current savings account interest rates, I'm left wondering why anyone would keep their money in a Chase savings account!  The rate my money will earn (outside SUB) is 0.01%, and the best possible rate I can find with Chase is a whopping 0.11% for $10,000,000+!?!  If anyone leaves $10,000,000 to languish in a Chase account at that return... there's just no way.

 

This is my first experience with Chase, and my question to all you MF'rs (there is no need for name calling LOLOL), is this:  Why?  Am I missing something, or are savings account simply not what Chase does?  As in, they are all about credit cards, investment account, and savings are just a "side gig"?  I'm just blown away that they can pay such low rates in this age of internet banking and expect anyone to park their money with them.

 

If they paid an even slightly comptetivie rate I'd probably just leave it there.  At 0.01% I'll be moving it on day 91... unless I'm missing some magical Chase "relatoionship benefit"?

 


I think there are several reasons for this. First, a well capitalized bank like Chase, BofA, Wells Fargo, Citibank et al, is that they do not necessarily need as many deposits on their books. A smaller community bank or credit union actually needs our deposits to lend out to other customers/members and to invest those funds for more capital; therefore, they are willing to pay more for our deposits than the national and regional banks. Internet/direct banks also likely need our deposits more and as they are branchless, they have less overhead and share those savings with their customers in the form of better interest rates. Second, I believe a lot of American's 1) do not have as much to save and 2) are not as well versed as the folks here at MyFico about saving and getting the best rates. If you only have $1,000 in savings you probably do not care as much about 0.01% APY as opposed to 1.00% + APY. People should care, but most do not. Finally, maybe I am mistaken and Americans are wise to this and have their funds invested at other banks/financial centres and only have a small amount at Chase et al for overdraft or rainy day funds and do not care about the Great Recession-era interest rates. I think a lot of people feel that their home's equity is their savings-which is good, but also housing is WAY inflated right now and I am personally hoping for a housing bubble burst. At least here out West. The cost of living in Denver is disgusting but I digress.

 

I took a personal finance class in high school that really taught me a lot about these sorts of things. It was an elective, but I feel that every high school student should have to take such a class before graduating. This was 20 years ago of course. These days they have classes about feelings instead......

Message 3 of 8
Anonymous
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Re: Chase savings account: Why?


@Girlzilla88 wrote:

I'm so glad you shared this I got that offer as well and seriously considered it but now I'm glad I didn't.


Actually the offer for the combined $600 ($300 for checking and $300 for savings) is actually a great deal. You move your money over to Chase for three months to earn the reward and then once that required time period has ended you move your funds back to an account that earns a great interest rate. Even though you would only earn 0.01% APY for three months at Chase, the $600 far outweighs the interest that you would have earned for three months even at 2.10% APY. Totally worth it. Just note that the rewards earned for opening bank accounts will be taxed. 

Message 4 of 8
Anonymous
Not applicable

Re: Chase savings account: Why?

Hi GirlZ.  You might have misunderstood our OP's post.  He's not saying opening up a Chase savings and checking is a bad thing to do.  Just the opposite: he's delighted he did that.  


What he's observing is that he will not keep those accounts open.  He'll close them after a while (most bonus chasers close their bank accounts at month 7).

 

As a matter of fact, it is only by closing the accounts that our OP will be eligible to re-open them and get that big bonus again.  Most chasers in the past would open a Chase savings and checking every year (closing them at month 7).  Recently Chase tightened that up so that you can only get the bonus every two years, but that's still pretty nice.

 

If you open a business checking you can get a $300 bonus there as well, so our OP could actually get $900 every two years.  As he observes, that is vastly more than he can make in interest even from a very high-interest account.

Message 5 of 8
Girlzilla88
Valued Contributor

Re: Chase savings account: Why?

I was more focused on the later part to his message than the beginning to it....I don't disagree about the SUB being great but keeping it is the concern I had if it would be worth it but that is good to know that's an option to just close after 7 months and do again haha







Message 6 of 8
Revelate
Moderator Emeritus

Re: Chase savings account: Why?

If Chase didn't want more money on deposit they wouldn't offer the SUB's to begin with.

 

A lot of people are bad at money, though to be honest I don't even see the point of keeping a 2% APR savings account - guarunteed 5% now we're talking like the 1k cash reserve I keep at DCU if I ever need it immediately (like 5 minutes from now, I can't see ever needing that though admittedly).

 

Frankly when you can do better with CD laddering or even short-term treasuries both of which are no-risk why on earth keep anything significant in any savings account unless the interest rate can beat them?

 

I guess some people must be converting and holding for a long enough period for Chase to consider the SUB to still be worthwhile, but I never even bothered chasing the SUB, and I'd rather have my money working harder than leaving non-trivial cash in a savings account.

 

Ultimately a Chase savings account is probably just an small interest bearing account for cash sidelined from one's more material investments from some investing strategies vis a vis investing on correction dips cause their default cash sweep fund is pretty lame too, but ultimately I agree with the assertion Chase savings accounts aren't great, hence I never even opened one... but I think the same thing of the vast majority of savings accounts too so that's not exactly news haha.

 

 




        
Message 7 of 8
Anonymous
Not applicable

Re: Chase savings account: Why?

Chase -- and other banks with a paltry savings rate -- market it for the service rather than the rate. They make it easy for people to put money where they feel they won't be tempted to spend it, but it's still linked to pay overdrafts from your checking account: two things that appeal to the masses.

 

Side note, Chase is offering 2.00% APY on a 9 month CD, at least in my neck of the woods. That may not be as good as some online banks, but it's better than almost every other brick and mortar around.

Message 8 of 8
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