CNBC: Fed Cut's Impact on Savings
In response to the rate cut on Wednesday, CNBC writes, "Here's how the Fed's rate cut will affect your high-yield savings account." They say, "The Federal Reserve cut interest rates on Wednesday for the first time since 2008. And while that may be good news for those looking to take out a loan or manage their credit card debt, it could mean the interest rates on high-yield savings accounts take a hit." "The only real losers in all of this are people with online-only savings accounts," WalletHub CEO Odysseas Papadimitriou tells CNBC Make It. He says interest on these accounts are expected to drop by about 0.11%." The article continues, "Yet major online banks already started dropping their rates in June. Ally Bank's online savings account APY fell from 2.20% to 2.10%, while Marcus by Goldman Sachs lowered its savings account rate from 2.25% to 2.15%. And while the robo-advisors haven't dropped rates yet, customers will likely see a dip following Wednesday's Fed announcement. In a blog post published last month, Wealthfront co-founder Andy Rachleff noted that he expects the Fed rate cut to affect the company's savings option. 'If the rate is lowered by 0.25%, then we will have to lower the rate for our cash account by the same amount.' But he added that while most banks will lower interest rates by more than the Fed rate decrease, Wealthfront will avoid this practice. Betterment's interest rate will also move in a similar direction to the Fed rate -- although customers who signed up for the Everyday Checking account waitlist will see a higher rate than those who opted out.... 'The very structure of the account is that the [interest] rate floats with Fed funds,' Adam Grealish, Betterment's director of investing, tells CNBC Make It." It adds, "Ken Tumin, founder of DepositAccounts tells CNBC Make It expects banks like Ally and Marcus will actually cut interest rates up to an additional 0.15%. ‘I think banks are careful to spread out the cuts so they're not so obvious. That may be why they began cutting last month,' he adds.... In a statement to CNBC Make It, Ally Bank said Wednesday it 'continually monitors market conditions, including the health of the economy, the current federal funds rate, the competitive environment and more when determining interest rates on deposit products.'"
