It’s no secret that banks largely make money from collecting interest payments on loans. And, the money banks loan out comes from customer’s deposits. You might not realize the way banks generate hefty profits is by paying depositors as little as possible while keeping lending rates high. The difference in what banks pay compared to what they earn is called the net interest margin.
The business model of a bank creates a misalignment of interests between depositors and the bank which is incentivized to pay as little as it can on its deposits to increase its profit margins. According to Bloomberg, the spread between the interest income received from loans and the interest paid on deposits has never been so high.
Treasure has a different business model. We believe in aligning our interests with our depositing clients. By offering sophisticated treasury services to growing businesses, we boost their efficiency and resilience and make a positive impact on their bottom lines. Our experienced investment team is constantly looking for ways to optimize returns for our clients and simultaneously mitigate risk, even for our cash allocation.
You might be wondering about the impact of Treasure in terms of cash management outcome. We dug into the data and found deposits at the 5 largest banks totaled $7.9 trillion. This means depositors forfeited approximately $33.6 billion dollars over the last three months by keeping their money in interest bearing accounts with these banks instead of using Treasure! In fact, the average interest rate for these five banks was 0.39% compared to Treasure’s 2.09%.
Large banks are notoriously slow to raise deposit interest rates in a rising rate environment and instead use it as an opportunity to increase their net interest margin and boost their own profits. Treasure raises your interest rate as the federal interest rate increases.
Stop gifting your money to large banks and open your Treasure account today.
* Deposits sourced from FDIC
** Assumes current rate for prior three months
*** Rates sourced from Bank’s website