How does a bank stay in business giving only .01% interest on deposits?

Don’t banks need depositors so they have money they can lend out? I can’t imagine this place, Current Savings, CDs and Money Market Rates | Rockland Trust has ANY deposit accounts anymore. How can they stay in business?

This is an automatically-generated Wiki post for this new topic. Any member can edit this post and use it as a summary of the topic’s highlights.

Most major banks haven’t competed on deposit rates in decades.


Even in the worse of times the last two years, it wasn’t hard to get at least .50%, and now 1.00% is common. Why would anyone keep money in a bank at .01%?

Scale matters. An extra .49% is $25/year for someone with an average balance of $5000. Who would bother, other than perhaps us obsessive FWF types, lol? I wouldn’t use a non-local bank just to get an extra $25/year.

Most younger people I know are fully invested in equities and don’t care what their working cash in a checking account gets. Guess it depends on your goals.


The average customer is surprisingly sticky to the businesses or brands they have always used. If the service provider hasn’t done them wrong, it’s risky to switch to a different provider.

I think this is why the deposit bonuses for banks work, I believe they need to provide these in order to lure in these sticky customers. The fact that they also hook in some gamers is just unintended bycatch.


I can help you with that (no, I’m not in CS, but have been stuck on the phone enough). You must watch it, at least through the 1:02 mark. Then you’ll have your answer.


A lot of people have like $350 in the bank until they get their next paycheck.

They’re not going to switch banks for an extra $1.35 a year in interest. I mean 0.004% vs 0.00001%?? THats what it looks like. If you see those 8 cent interest payments rolling in you’re not gonna care.

Switching banks means changing your card, getting new checks, changing all your auto pay. Its like minutes or even HOURS of work.


Well sure if you just have $350 in the bank it doesn’t matter and most banks wouldn’t care about those depositors anyway. I’m talking about those with 6 figure or at least 5 figure balances.

Another factor is that many people prefer have accounts in banks with physical branches or are nationally known which also tend to have local branches. These banks usually give low interest on savings. Those folks may like the convenience of a branch or are leery of non-local and internet banks that offer higher interest.


Not really.

Here is an explanation on how it works :