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Will Banks Ever Pay Savers More?

Low interest rates have helped the economy recover from the financial crisis. But it has also hurt savers, and Wells Fargo (NYSE: WFC  ) , JPMorgan Chase (NYSE: JPM  ) , Citigroup (NYSE: C  ) , Bank of America (NYSE: BAC  ) , and other big banks seem stingier than ever when it comes to paying interest on bank accounts. Will a trend toward rising rates help savers?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at where investors can get better rates from banks. Dan notes that big banks like the aforementioned ones don't have much incentive to pay attractive rates to depositors, as they can get funding cheaply through the Federal Reserve and currently have more than enough liquidity for their own needs. By contrast, Dan recommends looking at smaller banks and credit unions, which have to fight to get the capital they need to operate effectively. Dan gives one solid example of a financial institution paying almost a full percentage point above the next-highest bank on five-year CDs, noting that it pays to shop around for the best deals you can find.

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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10/24/2014 4:00 PM
BAC $16.72 Up +0.12 +0.72%
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