Chase savings rates are low because the bank sets them based on what it costs to borrow money, not what savers need

Chase's savings account rates—currently around 0.01% APY on standard savings accounts—are low because large banks like Chase don't compete on interest rates the way smaller banks do. Chase makes money by lending deposits out at higher rates than it pays you. When the Federal Reserve keeps its benchmark rate low, banks lower what they pay depositors. When the Fed raises rates, banks raise deposit rates too, but usually more slowly and by smaller amounts.

Chase has little reason to offer competitive rates because most customers stay with the bank for convenience—branch access, debit cards, checking accounts, credit products—not for savings interest. A customer with $50,000 in a Chase savings account earning 0.01% makes $5 per year. That same customer might have a mortgage, auto loan, or credit card with Chase, which generates far more profit for the bank than the savings account ever will.

Smaller online banks and credit unions often pay 4% to 5% APY on savings because they have no branch network to maintain and they compete directly on rate. They need deposits to fund loans. Chase doesn't need your deposits the same way—it funds lending through wholesale markets and has access to cheaper capital sources that smaller banks cannot reach.

Key Takeaways

  • Chase savings rates track the Federal Reserve's benchmark rate but lag behind it, and the bank passes only a fraction of Fed increases to savers.
  • Large banks profit more from lending and credit products than from paying interest on deposits, so they have no incentive to match online bank rates.
  • Online banks and credit unions typically pay 4% to 5% APY on savings because they compete directly on rate and have lower operating costs.
  • Your money in a Chase savings account loses purchasing power to inflation when the rate is below 3%, which has been true for most of the past decade.

How the Federal Reserve rate affects what Chase pays you

The Federal Reserve sets a target range for the federal funds rate—the rate at which banks lend to each other overnight. When the Fed raises this rate, banks have more incentive to pay depositors more, because they can earn more by lending money out. When the Fed cuts rates, banks cut what they pay you.

But Chase does not raise or lower its savings rate in lockstep with the Fed. In 2022 and 2023, the Fed raised rates from near zero to over 5%, but Chase's savings rate climbed to only around 0.01% to 0.05%. The bank kept most of the spread—the difference between what it earns and what it pays you—for itself. Online banks raised their rates to 4% and higher during the same period because they needed deposits to compete.

Chase will eventually lower its savings rate when the Fed cuts, but it will likely do so faster than it raised rates. This pattern repeats: savers lose on the way up and lose again on the way down.

Why Chase's branch network and convenience cost you money

Chase operates roughly 4,700 branches across the United States. Maintaining that network—rent, staff, security, technology—costs billions per year. The bank spreads those costs across all its products. A customer who values being able to walk into a branch and speak to a teller is paying for that convenience partly through lower savings rates.

Online banks have no branches. They have smaller staff, lower rent, and lower overhead. They pass some of those savings to depositors in the form of higher rates. A customer at an online bank trades branch access and phone support for a higher APY.

Chase could offer higher savings rates if it wanted to. It chooses not to because the bank's research shows that most customers will not move their money for an extra 3% or 4% APY. They stay for the debit card, the checking account, the mortgage, the credit card. The savings account is incidental.

What Chase makes from your deposits versus what it pays you

When you deposit $10,000 in a Chase savings account at 0.01% APY, you earn $1 per year. Chase takes that $10,000 and lends it out—to a mortgage borrower at 6% to 7%, to a credit card holder at 18% to 24%, to a business at 8% to 12%. The spread between what Chase earns and what it pays you is enormous.

On a $10,000 mortgage loan at 6.5%, Chase earns $650 per year. On a $10,000 credit card balance at 20%, Chase earns $2,000 per year. Your $1 in savings interest is noise compared to the profit Chase makes by lending your deposit out. The bank has no financial reason to raise your rate.

This is why Chase's most profitable customers are not savers—they are borrowers. A customer with a mortgage, an auto loan, and a credit card generates thousands in annual profit. A customer with a savings account generates pennies.

How inflation erodes your money in a Chase savings account

Inflation has averaged around 3% to 4% per year over the past decade, though it spiked to over 9% in 2022. When your savings account earns 0.01% and inflation runs at 3%, your money loses 2.99% of its purchasing power each year. A dollar in your account today buys less next year.

This is why savers who keep money in low-yield accounts are effectively losing money. They are not earning returns; they are watching their savings shrink relative to the cost of living. Chase's low rates make this problem worse than it needs to be.

A savings account at an online bank earning 4.5% APY still loses purchasing power if inflation is 5%, but the loss is much smaller. The difference between 0.01% and 4.5% compounds over years. On $50,000, that is roughly $2,250 per year in additional earnings—money that stays in your account instead of disappearing to inflation.

When it makes sense to keep money at Chase despite low rates

Chase's low savings rates are a problem if your only reason for banking there is to earn interest. But if you have a mortgage, a checking account, or other products with Chase, moving your savings to an online bank while keeping those products at Chase may make sense. You get the convenience of Chase for borrowing and checking, and you get competitive rates elsewhere for savings.

Some customers value having all their money in one place, even if the rate is poor. If you move $50,000 to an online bank, you now have two logins, two statements, two institutions to manage. For some people, that friction outweighs the interest gain. That is a reasonable choice, but it is a choice—not an inevitability.

Chase also offers a high-yield savings account called Chase Savings with interest, which pays a higher rate than the standard savings account. As of early 2024, this account paid around 4.35% APY, though the rate changes. If you have a large balance and want to stay at Chase, this account is worth comparing to online alternatives. The rate is still usually lower than what online banks offer, but the gap is smaller.

How online banks and credit unions undercut Chase on rates

Online banks like Marcus, Ally, and American Express Personal Savings have no physical branches. They operate from a handful of offices and handle customer service through phone, email, and chat. Their cost per customer is a fraction of Chase's cost.

These banks also compete directly on rate. When one online bank raises its rate to 4.75%, others follow within days. They have to, because a customer can move money in minutes. Chase does not face this pressure because most customers will not leave over savings rates.

Credit unions operate on a membership model and often prioritize member returns over shareholder profit. Many credit unions pay 4% to 5% APY on savings, especially on balances up to $25,000 or $50,000. If you are a member of a credit union, checking their savings rate is worth a few minutes.

Frequently Asked Questions

Will Chase ever raise its savings rate to match online banks?

Chase will raise its rate when the Federal Reserve raises rates or when competitive pressure forces it to. Right now, competitive pressure is weak because most Chase customers do not shop around for savings rates. If you move your savings to an online bank, you are not punishing Chase—you are making a rational financial choice.

Is my money safer at Chase than at an online bank?

No. Both Chase and online banks are FDIC-insured up to $250,000 per account. Your deposits are equally protected. The difference is the rate you earn, not the safety of your money.

What if I need to withdraw money quickly from an online bank?

Most online banks allow transfers to your checking account within one to three business days. If you need cash when ready, you can transfer to a Chase checking account (or any bank with branches) and withdraw from an ATM. The delay is rarely a problem for savings accounts, which are meant to hold money you do not need right away.

Does Chase offer any savings account with a competitive rate?

Chase Savings with interest currently pays around 4.35% APY, which is competitive but usually still lower than the best online banks. The rate changes, so check Chase's website to see the current offer. If you want to stay at Chase, this account is worth considering.

Why does Chase advertise its savings account if the rate is so low?

Chase advertises because the account is profitable for the bank, not because it is a good deal for you. The bank makes money on the spread between what it earns on your deposit and what it pays you. A low rate that attracts deposits is exactly what Chase wants.