Here's Why Your Bank Account Interest Rate Won't Go Up Even If the Fed Raises Rates

Here's Why Your Bank Account Interest Rate Won't Go Up Even If the Fed Raises Rates

The Federal Reserve has raised rates four times since 2015. The market expects a fifth post-crisis increase in the Fed's target rate on Wednesday, which would bring the fed target to a range of 1.25% to 1.5%.

Even as interest rates trudge higher, most savers aren't seeing the benefit on their checking or savings accounts. That's because many banks have all the deposits they need -- and then some -- eliminating the need for banks to compete with higher interest rates on their deposit accounts every time the Fed votes for an interest-rate increase.

Interest rates are nothing more than the price of money. The price of anything, including bank deposits, is governed by the basic law of supply and demand. 

Continue reading

Source: Fool.com