Banks are hiking up the rates they charge customers for loans and credit cards, but haven't kept pace raising interest rates paid on savings.
Banks are harvesting money from loans while the rates paid out to their depositors remain stubbornly low, boosting profits in the industry.[…]Banks typically raise rates on loans soon after the Federal Reserve boosts its rate. They lag in paying out a hike in interest rates to their depositors, according to Novantas, a bank consulting firm.
To put it in perspective, the rates banks are charging on a 30-year fixed rate mortgage jumped from 4.09% in December 2015 to their peak of 4.34% this past March (they are now at 4.15%), according to data collected by Bankrate. Credit card rates jumped from 14.96% to 16%.
Meanwhile, savers are still collecting measly interest. The average yield on six-month, one-year, and five-year certificates of deposit had gone up merely 0.06, 0.09, and 0.07 percentage points respectively in the same time period.
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