Today, Max members just got a raise, for doing absolutely nothing.
GE Capital Bank raised the interest rate it pays on its online savings account from 0.90% to 0.95%. Over the next 30 days, every Max member with a GE Capital account will benefit as their cash balances are reallocated, directing funds to GE Capital to earn this higher rate. For our members with $1,000,000 in cash being optimized, that amounts to $500 of incremental interest income per year for doing absolutely nothing. No need to monitor interest rates. No need to login to their online savings accounts or order funds transfers. Max does all of this automatically, in the background, with no user intervention required.
Does this foreshadow the rise in bank interest rates that we’ve long been expecting? Since the financial crisis, banks have continuously cut rates to match the decline in bond yields and manage their balance sheets. Investors have suffered. Yet the online banks – most with different business models than traditional brick-and-mortar banks – can put incremental deposits to good use. As rates start to rise, we expect more entropy in rates, along with a widening of the spread between the interest rates offered by online banks vs. their brick-and-mortar peers. This means that it will become all the more important to focus on whether your cash is optimally invested.
Today, our Max members are earning a weighted average 0.88% on their cash that’s being optimized, automatically. That’s 0.78% more than the national savings average, and 0.87% more than most money market funds. You can learn more about Max at MaxMyInterest.com