The Wall Street Journal writes again on bank deposits. The article, "Banks Finally Start to Pay Their Depositors," tells us, "The grim decade in which savers earned near nothing on their bank deposits is ending. That is good news for consumers and bad news for some banks. Since the Federal Reserve began gradually raising interest rates in December 2015, banks have been slow to pay depositors higher rates. With the latest rate increases, that is starting to change. Online banks are leading the way, paying nearly 2%, while big banks are only just getting meaningfully above zero. What is important, though, is that every time the Fed raises rates, a bigger portion of that increase goes to consumers. In the second quarter, the so-​called deposit beta, or the portion of a rate increase that is translated into deposit costs, jumped to 44% from 28% in the first quarter, according to Keefe, Bruyette & Woods." The article continues, "One important reason deposit rates have stayed low is that after a decade of zero rates, savers now view bank accounts as ways to manage money and payments, not as a source of income. This effectively has made banks almost like technology companies, competing to offer depositors convenient websites, apps, and payment solutions." The Journal adds, "​Currently, Goldman Sachs' new consumer arm, Marcus, and credit card lender Synchrony Financial are both offering a 1.​83% annual percentage rate on liquid savings accounts. These kinds of rates haven'​t been seen since before the financial crisis. Overall deposit costs for online banks reached 1.​29% in the second quarter of 2018, up from 1.​11% in the first quarter, according to estimates by Credit Suisse. By comparison, deposit costs for all banks nationwide were 0.​64%, up from 0.​53% the prior quarter."

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