I got a Bank of America account when I was 15 and haven't really thought to switch my bank since, but my new job has me reviewing all my finances to see where i can squeeze out some savings. Apparently some banks are doing upwards of 4% APR on savings now???? Discover is 4.25%, SoFi is 4.50% if you set up direct deposit to either a checking or saving.
Also, since the Fed got rid of Regulation D's savings transactions limit for covid, some banks (including Discover and SoFi) got rid of it too, so you can basically use your savings as a checking account and get mad interest.
what a world
yes, it is super weird. I got my Baby's First Savings Account when I was a little kid (attached to a parent account) at a credit union as a place to deposit checks I got for Mary Chrimbo money.
interest rates on it were like 7%, of you can believe it. the 80s were weird.
all the financial literacy shit I grew up with said savings interest rates were tied to the Federal reserve rate. retail banks capitalized by borrowing money from the fed at the Fed rate and received deposits, paying interest on savings at a slightly higher rate and those banks could issue loans at a higher interest rate, the difference they would use for operational costs. credit unions would always offer slightly better interest rates on both ends, because they were organized for the benefit of their owner-members, not to extract profit.
those "online only" banks popped up and started offering slightly better rates than credit unions, but they still followed the overall trends. the story goes that by not having a brick-and-mortar footprint, they had less overhead and could offer better interest rates. also, they were a little slower to get your cash from and had those penalties for too many withdrawal transactions, so it was almost more like a deposit certificate. additionally, the dark story behind them was that they were the engine behind subprime auto loans. they could afford to pay those interest rates to savers because they were loaning it out to people with bad credit at predatory rates, all of it FDIC insured for the saver.
and this generally tracked for the first 20+ years of my life, even as interest rates hit all time lows in the first years of COVID.
but fed rates they shot back up, only the online bank savings rates went up. even my credit union still has laughable interest rates for savings. if I want the juice from them, I gotta lock into a CD.
the whole retail savings rate thing has decoupled very unevenly, and it feels like a bad omen which very few are paying attention to.
admittedly, I only became more discerning as a customer of retail banking services because I moved a shitload of times and was self employed during those times, with some clients cutting checks and some paying cash and I don't like carrying around cash or making deposits at an ATM so I had to go through the process of opening an account many times and started evaluating their terms more critically.