Current Events > What's the catch on all these 4% savings accounts popping up?

(+) Yeah! (+)

I know Apple kinda started it saying hey we offer 4% interest on savings accounts, which is neat

Now I'm getting an American express email saying they've got a 4% interest savings account as well.

Whats the catch? The skeptic in me knows there's something more to it than just "hey here's 4% savings" after YEARS of the average being basically half a %.

What happened? What's the catch? If I move my savings money to a 4% account, what am I losing or risking here?

Nothing. Banks need capital

When interest rates are high, the interest on savings accounts generally goes way up, too. Doesn't make sense to keep your money in an account that gives you less than 1% if ~4% is available. Even if it's only temporary.

Wouldn't the higher interest rate still not make up for the loss in value of the money due to inflation?

No catch. I mean, check with the individual bank to see if they have any specific restrictions or minimum account balance requirements, but my 4+% savings account has been giving me like $200 a month in interest.

Free money bro, def take advantage of it

No catch. It simply fluctuates with the fed rate, so when someone like Obama comes around and sets the fed rate to near zero, the savings rate changes accordingly. And when the fed rate goes up, so does the savings rate.

If inflation is through the roof people take their money out of the banks and put it in more lucrative avenues.

Banks obviously don't want that so they have to raise the rates on savings accounts.

Negatives:
-The rate will eventually go down.
-On a long-term basis, returns on S&P 500 (VOO) or total market ETFs (VT, VTI, VXUS) or mutal funds have a much higher return on investment. So you have an opportunity cost, with obviously higher risk.

Up?

No catch. Just keep monthly watch since the rate fluctuates.