Silly question about savings accounts
September 22, 2022 8:58 AM   Subscribe

A few years ago (maybe 2019) I opened a savings account with Capital One 360 when interest rates were good, maybe 1-2%. Eventually the rates fell, and I was getting 0.3%. Now it seems rates are back up, but my savings account rate never changed. What am I missing?

I probably have a fifth grader’s understanding here but want to check my assumptions. I opened a new account recently for a specific savings goal, and noticed that it’s now called Performance Savings and the interest rate was 1.9%, but my old account was just called Savings and the rate was still 0.3%. Did they simply change the type of savings account so that people not keeping up with their products would have the old rate? Why didn’t the rate go up in my old account?

I’m pretty mad as my lack of attention has cost me a decent amount of money (my emergency savings were parked there), but I’m trying to just understand what happened for next time. I don’t relish the idea of calling them on the phone unless I can get something out of it.
posted by anonymous to Work & Money (13 answers total) 1 user marked this as a favorite
Banks occasionally offer accounts which adjust their interest rates if they change. But these are special accounts, advertised as such.

We're all waiting for the big banks to raise their savings interest from the near-zero it's been stuck at since 2008. More discussion about that in this AskMe from July, Why are my bank's CD rates so bad? Once newer, higher-interest accounts are made available, you'll have to actively move your money into them -‌- the banks won't do that on their own.
posted by Rash at 9:28 AM on September 22 [2 favorites]

If you have an older product, they may grandfather in the older product's terms and conditions.

That said, I've had savings accounts at Capital One since they were ING, and they have always been updated with the latest name and rate. In the past, they've tended to be one of the worst at raising savings rates and have always come in a little lower than other savings accounts I've had. Looking at old statements quickly, the highest rate I see prior to this year is 1.01%.

Some thoughts:

* I think the Performance 360 brand antedates 2019 (though it's not exactly the kind of thing one pays close attention to), so perhaps your dating is off? Or are you accidentally in a CD?

* Consumer savings account rates really only began rising around May of this year. You should run the numbers to see if ~80 bps on your savings is worth your time for a call. That's a personal judgment (it's $160 on $20K). You will probably have to escalate to a manager to get any retroactive interest, but at least you'll get an explanation.
posted by praemunire at 9:33 AM on September 22 [1 favorite]

Banks occasionally offer accounts which adjust their interest rates if they change. But these are special accounts, advertised as such...Once newer, higher-interest accounts are made available, you'll have to actively move your money into them -‌- the banks won't do that on their own.

No, for savings accounts, it's perfectly common for existing accounts to update to the bank's current rate. They don't make a new product every time they change the interest rate. Now they do (usually pointlessly) rebrand the product from time to time, and that might involve grandfathering old terms (usually because the new product's terms are worse), and I think OP is wondering if they got stuck on the wrong side of that...but I don't think the timing works.
posted by praemunire at 9:36 AM on September 22 [2 favorites]

Yup, back in late 2019 or so, Capital One created "performance savings" accounts with higher rates and dropped the interest rates on their existing savings accounts (or maybe just kept those rates the same) without telling customers - so in order to get the better rate, you had to manually switch over to the "performance savings" account. Very irritating. Here are a few Reddit threads about it: one, two, three.
posted by LNM at 9:39 AM on September 22 [8 favorites]

I do not know the specifics of Capital One 360, but there is a dark pattern at work here that is widely used across industries.

I was paying about $90/month for home internet. At some point the cost went up to $110/month, and then $140/month. It took me about a year to get fed up and find the time to call my ISP about it. When I reached them, the sales rep immediately offered me a better plan at a cost of $65/month. At the end of the call he said, "next time don't wait so long to call us. We always have promotions." Lesson learned.

Banks are in no hurry to raise the interest rates that they offer. They know that it takes work for people to move their money somewhere else. They will wait as long as they can, padding their profits, before they improve their products. They might even offer higher interest rates to new customers than they do to existing customers, because they know the existing customers are sticky.

Moral: if you want the best deal, be prepared to shop around.
posted by Winnie the Proust at 9:50 AM on September 22 [4 favorites]

Oh, good, someone who actually remembers. I defer to LMN on the product change history! I actually think that reduces your chance of getting any sort of courtesy credit on the interest. But you should still do the math vs. your time/patience calculus.
posted by praemunire at 9:51 AM on September 22 [1 favorite]

For what it's worth, I've found Goldman Sachs' Marcus accounts to be very proactive about raising interest rates if you're looking for an alternative. 2.15%.
posted by slide at 10:04 AM on September 22 [2 favorites]

What am I missing?

The fact that the folks your bank is trying to keep happy are its shareholders, not its customers.

All my own banking for the past forty years has been done with a credit union (which has since merged with others and morphed into a customer owned bank) because no such distinction exists for those; every credit union member is both customer and shareholder, so credit unions are far less motivated to screw their customers over.
posted by flabdablet at 10:06 AM on September 22 [8 favorites]

I have a few accounts at Capital One 360 and I noticed that yes, the interest rates have jumped up a lot. What type of account do you have? They seem to change their 'products' often. Some of mine are in a 360 Performance Savings and some are a 360 Money Market. Both seem to have jumped up in their rates (last garnered interest on 8-31).

That being said, I did call their customer service once and I was pleasantly surprised at how easy they were to work with. They helped me switch some plans and close some others, and it was very efficient. I'd say give them a call and ask if you can adjust your account to a higher-interest type of account. (Or you can open a new 360 Performance Savings account online and transfer the balance of your current account to your new one.)
posted by hydra77 at 1:30 PM on September 22

I missed that you've got two accounts already. Just open a new account and transfer your old Savings into the new one, or just transfer it to your new targeted savings account (and have one account). Looking at their products, for some reason they have a Kid's account that has a super low rate (not sure if there are any benefits to that over the 360 savings). So yes, it's possible that you just have an old account that they kept grandfathered in.
posted by hydra77 at 1:35 PM on September 22

holy crap. I just checked and yeah 0.30% but I can convert that back to a 1.7% Performance savings account. man what a crappy thing to do.
posted by 922257033c4a0f3cecdbd819a46d626999d1af4a at 6:10 PM on September 22 [1 favorite]

I just wanted to chime in and say that your assumptions are correct, and it wasn't a silly question at all! And also, thank you for bringing the 360 Performance Savings product to my attention....I've had Capitol One since they were ING also, and had no idea that product existed. Thanks to this thread, I just moved my emergency savings from a money market account at 0.8%, to a new 360 P.S. account at 2%!
posted by csox at 7:33 AM on September 23

Both Ally and Marcus have been progressively raising their rates in response to the fed’s recent actions. Both are above 2% at present, I believe.
posted by panama joe at 4:14 PM on September 23

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