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Published: Mar 24, 2021 7 min read
Dramatic woman rejects a bank that tries to court her attention with a rose
Rangely GarcĂ­a / Money

News flash: You're probably not earning much interest on your savings these days. Rates are almost universally low at banks across the country. The average national savings rate is now just 0.04%.

The pandemic is partially to blame. Roughly a year has passed since the Federal Reserve cut its rates to zero to help the economy; at the same time, the personal savings rate has skyrocketed. As of January 2021, Americans had some $3.93 trillion stashed away — a marked increase from the $1.33 trillion they did in January 2020.

“A lot of people have seen stimulus checks, and they’re fortunate enough to remain employed. Combine that with not having opportunities to spend with the shutdowns,” says Ken Tumin, founder of DepositAccounts.com. “Banks, more or less, are flush with deposits.”

This matters because banks make money by taking consumers’ deposits and lending them out. If they’ve got a lot of deposits, as they do right now, they don’t need to fight to attract customers by advertising high rates. Even the online high-yield savings accounts aren’t so high-yield any more.

“If you’re looking to save with APY, this is one of the most difficult times in our history,” Tumin adds.

So what can you do about it? Do you have bargaining power? Can you get your bank to increase its savings rate by threatening to leave? Here's what to know.

How to ask your bank for a better savings rate

You may think the customer is always right, but Tumin says it’s hard to predict whether you can get a higher savings rate by calling your bank and threatening to take your business elsewhere.

It varies by chain. It also depends who you speak to — whereas a branch manager or supervisor may have wiggle room on rates, a front-line customer service representative probably doesn’t.

To increase your chances of success, you should come prepared with evidence. If a competitor is offering a higher rate on a similar product, you may be able to get your bank to match it. But Tumin recommends making sure the institutions are actually in the same league. Your local brick-and-mortar community bank probably won’t care about a startuppy online bank.

You should also check that the rate you're pointing to isn’t a promotional, limited-time-only one.

“You have to look at their ongoing, standard rates,” he says. “Make sure you’re comparing apples to apples, not apples to oranges.”

Even so, you shouldn’t expect a lot of improvement. Tumin says that usually, roughly a quarter of a percentage point is the most leeway a bank can give.

Why your bank might be willing to negotiate

One area where you might be able to make some headway is with fees.

A DepositAccounts study found that banks generated about $34.6 billion in fees in 2016. Another survey found that the average fee for a basic checking account is $9.60.

“When somebody opens a checking account or savings account or credit card, they come with a really long terms of service [agreement] that nobody reads,” says Paul Kesserwani, CEO of the fintech firm Cushion. “More often than not, the consumer doesn't know fully what they're signing up for.”

Kesserwani encourages you to speak up if you're not happy with how much your bank charges. He says there’s about 15,000 financial institutions in the United States competing for the same pool of customers, and expansion can be expensive. Because of this, they’re likely to take your request for a waived account or overdraft fee pretty seriously.

“They’d rather give the consumer some money back than risk losing them and having to pay a lot more money to acquire a new one,” he adds.

How to save money on bank fees — without a confrontation

Some people are intimidated by the very idea of negotiation. That’s where Cushion comes in. You pay Cushion something like $36, and its high-tech bots write emails, chats and actual letters on your behalf to reduce penalties on credit cards and bank accounts. Think: ATM charges, late fees, transfer fees, etc. Then you keep the refund.

Paying fees to get rid of fees may seem counterintuitive, but the value of using a service like Cushion is that it’s convenient and knows how to decode bank statements. It’s similar to the bill-cutting companies Money has previously covered. Kesserwani says Cushion scored $1.2 million in refunds for its conflict-avoidant customers in February alone.

“We end up getting people a ton of money back — money that they thought they'd never see again,” he adds.

The bottom line? If you talk to the right person and bring compelling evidence, it is possible your bank will give you a slightly higher savings rate. But it probably won’t be a huge increase. Getting fees waived is probably easier.

Finally, even if you hire a service to do it for you, you will likely need to suggest you're so dissatisfied that you're going to take your money elsewhere.

“Banks often want to keep you as a customer,” Tumin says. “If you have a relationship and you're a long-term customer, they'll be more likely to waive a fee now and then or give you a higher rate on your deposit account.”

More from Money:

Interest Rates for High-Yield Savings Accounts Probably Won't Bounce Back 'for the Foreseeable Future'

What's a 'Good' Savings Account Interest Rate, and Where Can I Get One?

I Was Skeptical of Online Banks — Until Experts Showed Me Their Money-Saving Potential