While inflation tops eight per cent and the Bank of Canada raises interest rates in response, the interest banks pay for savings accounts are still largely languishing at around one per cent
As inflation tops eight per cent, anyone with money in the bank is seeing their savings drip away at the fastest rate on record because interest rates for savings accounts, still largely languishing at around one per cent, haven’t kept up.
“When there is lower competition between banks, then it takes more time for them to adjust rates on deposit accounts.”“When banks don’t increase rates on deposits they’re making more profits … It’s a very easy way to make profits, to have a low rate on deposit accounts.” Some banks have also started to increase rates, though often via short-term promotions and other restrictions, and it’s not across the board.
Macmillan said that more people moving to alternative lenders could put more pressure on the big players. “So there’s less pressure to increase the deposit rate, unless deposits start reducing dramatically or a competitor raises rates.”
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