These Banks Will Now Charge You A 4.00% Prime Rate

Tyler Durden's picture

One of Janet Yellen's stated reasons behind the Fed's rate hike has been to reward savers with a slightly higher rate of interest on their deposits: after all, for nearly a decade the interest collected by depositors across US banks, with a few exceptions, has been 0.0% or thereabout. Unfortunately, as noted yesterday, even with the Fed Funds rate now the highest it has been in a decade at 0.75%-1.00%, that does not mean that any bank will be hard pressed to compete for America's savings - with some $2.1 trillion in excess reserves still out there, and with many banks shutting down "unprofitable" accounts, quite the contrary - and as such, the unspoken message in yesterday's rate hike is that savers are, once again, screwed.

 

However, while most banks are in no rush to pay savers and depositors more, or anything for that matter, they wasted no time in piggybacking on the Fed's rate hike by boosting their own Prime Rate, the interest that banks charge their most credit-worthy customers. To be sure, the vast majority of borrowers pay vastly higher interest rates, but Prime - like Libor - serves as the floating benchmark for many, if not most now that Libor is defunct, outstanding secured and unsecured loans, including credit cards and mortgages.

It is those borrowers who may be interested to know that as overnight, virtually every bank has now increased its Prime rate from 3.75% (where it was after the December rate hike) to 4.00%, oh and they have no obligations to notify debtors of the increase

Among the banks who have announced an increase in their Prime rate are the following:

And while savers are once again getting the shaft, and major beneficiary of yesterday's Fed rate hike will be... the banks again. Recall that the Fed pays lenders Interest on Excess Reserves, or IOER, which as of today is 1.00%. And since currently there is $2.13 trillion in outstanding bank excess reserves (a number which fluctuates depending on whether banks are using other Fed liquidity conduits at any given moment), it means that as of today, the Fed will pay banks $21.3 billion in interest on reserves every year (assuming the Fed does not hike more), an increase of just over $5 billion from the $16 billion in annualized interest banks were received from the Fed until yesterday.

Indeed it pays to be a bank. In fact, it does so twice.

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Herd Redirection Committee's picture

Got to love Rothschild banking.

HRClinton's picture

So what stopped you from being a Rothschild? 

Ah, yes... the Church in Rome. 

The Church that wanted you to stay blessed and poor, while others got rich. Glad I'm not part of that church. My 'church' wants me to be rich. Filthy rich. The RC Church? They just want you filthy, so they can be rich. 

While the banks get paid twice, as ZH points out, the Church buggered you twice. How nice.

hedgeless_horseman's picture

 

Prime Rate: the rate at which banks will not  loan money to their best customers.

NoDebt's picture

Interest rates on credit cards never dropped with the Fed Funds or 10 year UST rates.  They were 18% before the 2008 financial crisis, 18% after it and are still at 18%.

I think this is more relevant because the Prime Rate..... ain't you or me.

 

hannah's picture

18%...thats low...i've seencards with 29% for years now.....buying cigarette and candy crush games for 29% interest...hahahahaha

chumbawamba's picture

You people ("people") are either kids or have short memories. When I did demean my personal finances by holding open credit card accounts, banks used to actually have to compete with other banks to get your business. I remember zero percent interest for 12 months upon transferring a balance, and no card ever had more than say around 8% interest or else I would just transfer that balance to another card offering me a lower rate and some other incentives. Then again, I had excellent credit as well.

It all turned to negative interest (in my favor) when I employed the Private Citizen Bailout Facility, a.k.a. the Obama Bailout. I requested and got credit limit extensions on almost all of my accounts; I then proceeded to max out every single one buying preps and metals. This was 2009-2010. Despite the changing of the guard, the Obama Bailout is still available. Simple carry out the steps I did and enjoy your debt free lifestyle (results may vary; lawsuits will likely proceed on balances of $10,000 or more; mortgages and other secured loans are trickier to simply walk away from without leaving significant collateral on the table).

Get to it. No one in congress is going to vote you a bailout, not even your own representative, whom you may have even contributed to financially or even helped get elected by working on their campaign. No, all you need to take this bailout is some balls and a sense of dignity and self-preservation.

I am Chumbawamba.

Philo Beddoe's picture

Ahem...those pesky lawsuits. What about those? Serious question. 

Joe Sichs Pach's picture

Depends on the plaintiff.  

Original creditor = more difficult, likely settlement and/or judgement against you

Not origrinal creditor = spend some time researching, educating yourself and plan to go to court and you'll likely end up winning

peippe's picture

unsecured debt default hurts credit for seven years, 

unsecured debts can be 'chased' for seven years,

court judgement is good for seven years.

if you can hold your breath for seven years, live with the credit 'ding', 

more power to you.

Note: if, at any time, you make payment on said debt, the seven year window to collect restarts anew.

BAFH's picture

18%...that's adorable.  I've heard of a lot at 24% and one I actually heard was charging a "penalty" rate of 27%

AGuy's picture

FWIW: I am not sure why Banks use even offer low rates for any borrowers. Screw the Fed and normalize loan rates to ~6.5% for prime borrowers. Currently a 30 yr Fixed mortgage is about 4.15%. It should be more than 6%.

HenryKissingerChurchill's picture

So what stopped you from being a Rothschild?

Sorry Hillary but you are a not a Rothschild, not even a Rothschild minion...

Herd Redirection Committee's picture

I have been well fed and pursued a self-directed education my entire life, so I suppose I just never got around to falling in love with money?

(As the saying goes, its not money that's evil, its "the love of money" that is the root of all evil)

Joe Davola's picture

A decade of sub 1% fed funds and nothing to show for it in economic recovery.

Arnold's picture

There are several things worse than a serial spammer not labeling their spam.

Harry Quant's picture

Fuck every last one of these banks.
Better off w/ a credit union. 

IronSights on'um's picture

I work for one of these banks and I bank w/ the local credit union

cn13's picture

Why would anyone have a bank account open with one of the "too big to fail" banks?

They have proven they are nothing but a den of thieves that cannot be trusted.

Starve The Beast!

My local credit union rocks.

HRClinton's picture

You do raise a valid point. Having a bank account with one of these, only pencils out if you're a rich client.

Meaning: all those Fees go out the window. Actually, they go to all the small fish instead, so that the big fish enjoy all those free benefits and services. 

God, I love this country. All those "gibme" things for the very poor and the very rich.

(Lunch time!)

NotBuyingIt's picture

I've had dealings with several of these cunt banks on the list. All dealings ended badly. Local banks & credit unions only from now on for me. It has worked out quite well for the past few years.

FUCK these beast cunts. Let them starve.

aliens is here's picture

People will always get the fking shaft. Gov't don't work for the people they work for the banks and we are working slaves. FK you Yellen.

FreeShitter's picture

The ultra rich have been fucking over the poor, always have, always will until the poor (bottom 80% decide to say enough is enough)

Philo Beddoe's picture

Lest we not forget the ultra stupid which is running at 90%. I am being generous with 90%. 

dchang0's picture

Very true. We have to remind the communists/socialists that the program is still oligarchy/plutarchy and oligopoly underneath those supposedly "equal" systems. It'll be the rich communists fucking over the poor communists and poor non-communists.

NihilistZerO___'s picture

His name was Emanuel Goldstein...

GRDguy's picture

The above is certainly a nice list of those who lie and steal from you with every ounce of energy they've got.

Seasmoke's picture

Financial RAPE !!!

buzzsaw99's picture

i thought they ended that ioer program. if not well that explains everything.

money for nothing, chicks for free bitchez.

youngman's picture

My Wells Fargo bank just sent me a notice that my interest checking account is no longer....its now $10 a month and they pay no interest....lol....it never ends their greed

2ndamendment's picture

There are quite a few banks that still offer free checking. Someone mentioned credit unions - that's a good option. I also like USAA for their banking options albeit the interest rate they pay on checking has shrunk to almost nothing due to abnormally low interest rates for a decade. 

Lostinfortwalton's picture

I use USAA for mortgage and car insurance but not for banking. You have got to be able to go see a local banker face-to-face if anything in your account gets seriously screwed up. Too many nightmare stories about USAA banking foul-ups to go with them for that.

Lostinfortwalton's picture

I had a free checking account with First Union before they got bought out by Wells Fargo. I used it to keep company travel business accounts separate from my ordinary household accounts. After a few months Wells Fargo started coming up with one condition after another to maintain the free checking. I closed it and only regret not doing it sooner.

orangegeek's picture

fed funds rate still at 66 bp

 

shit show

1stepcloser's picture

Ethereum here I cum

2ndamendment's picture

4 words for you : Fixed interest rate loans.

 

6 even better words for you: Neither a borrower or lender be. 

Consuelo's picture

 

 

But I can still be a Usurer and a Rent Seeker...  

johand inmywallet's picture

4 better words:

Kill all fucken bankers!

Silver Savior's picture

So when they take money out of your account like they did in Greece how is that measly percentage they present as bait going to help you? 

1.21 jigawatts's picture

The moral is:  never trust a Joo.

adr's picture

American Express lowered my rate to 9%. I have a Chase card I never use that is set at 27% even though I have a credit score of 820. Back in 2009 Chase gave me a 1.9% lifetime interest rate on balance transfers up to $10,000. Somehow that lifetime rate is now 5%, more lawsuits have been filed against them for false advertising, but nothing will come of it.

I remember when the teller said that I had a lot of money in my checking account and said I should move it into a savings account for the interest. I looked at her and said, "Why, the interest rate is .28%. Even with one million in a savings account I'd barely make $3000 and your bank is fine with charging 27% interest on my credit card. I'll leave it where it is."

Lostinfortwalton's picture

I had a credit card account with the old Wachovia Bank (the one in North Carolina) at a rate of abot 6.9%. When Chase bought them out they tried to double my interest rate. I called and cancelled the card and paid it off at the old rate. God I hate Chase and that asshole that runs it.

Uranium Mountain's picture

Three things I hate...:

Banks,  Insurance companies and Lawyers.  

whatisthat's picture

These banks need to pay 4% on savings accounts.

Silver Savior's picture

That's still nothing. lol. Factor inflation (the real Numbers) and you are still losing value.