Save your money at Chase Bank, and they will pay you 0.01%. Go over the Bank of
America, and they'll give you 0.03 percent. But, if you go to Wells Fargo,
they will pay you 0.01 percent. What the heck! What's up everybody? I am
Jaspreet Singh, and welcome to the Minority Mindset. You've been smart with
your money, you've been living below your means, you've been saving a little bit of
money, and you've been investing some of your money, every time you get paid. oh
yeah, oh. But if you look over at your bank savings account statements, you might
realize that your bank account is paying you squat. Nada. Nothing. I know. Your
savings are not there to make you wealthy, but it would be nice if your
savings didn't have to just sit there and do nothing, this way it's not slowly
being eaten away by inflation. I mean, is that so much to ask from our banks that
we give our life savings to? That's why, in this video, I'm gonna be going over
why your bank account pays you nothing, and how you can get a better return on your
savings while keeping your money safe, so make sure you watch this video until the
end. But, before we get into that, make sure you hit that thumbs up button below
and subscribe to the Minority Mindset YouTube channel, that way you don't miss
our new financial education videos, every single weekend. Hit that little
notifications bell too because if you don't, then YouTube doesn't let you know
when our new videos are released. First, let's start by understanding how the
banking system works. I'm not gonna do a full in-depth analysis in this video
because I've already talked about this before, so here's a quick summary. You
have $100 that you do not want to keep under your mattress, so you go to your
bank, this is you—let me draw you a nice mustache—you go to your bank, and you
deposit this $100 into your savings account so you can keep your money safe.
That's when your bank will take your $100, and they will give you a lollipop.
So, here is your lollipop. But, your money doesn't just sit there in a vault
somewhere. Your bank is gonna use your money; they're gonna use your 100 dollars
to make the bank more money. Now, watch this. Your bank is gonna take this $100
that you deposited, and they're gonna give some of it to Bunty here, this way
he can go and buy things on his credit card. They're gonna loan some of it to
Nancy, so she can go and buy a big house. And they're gonna loan some of it to
George here, so he can go and finance his dream car. Or they're gonna give George
that money, this way he can go and finance his dream boat. Don't be like
George. So now, your bank is gonna make something like 25 percent interest on
this credit card they gave to Bunty if he doesn't make his payments on time.
They're gonna make something like 4 percent on Nancy with her mortgage, and
they might make another—I don't know—6 percent on this boat that they helped
finance for George. Sure, your bank might not lend out all $100 you deposit. They'll
save a couple of dollars in the vault just for protection. But, the bank has a
superpower called fractional reserve lending which allows them to turn this
$100, you deposited, into something like $1,000 or $2,000—something between there—
that way they can loan out your $100 again, and again, and again. This
fractional reserve lending essentially says, the banks have the power to print
money out of thin air, and yes, it is legal for banks, but it is illegal for
you. If you try to do that, you would end up in jail and no, I will not represent
you as your attorney. That means, your bank is gonna make somewhere between 4%
and 25% in interest from this $100 that you deposited into the bank, and the
bank is gonna make that interest again, and again, and again, from your money, and
in exchange, as a thank you for making the bank rich, your bank will pay you
with a lollipop and almost nothing in interest on your savings.
Now, these low interest rates that you're getting are partially because two: Interest
rates are historically low. The Federal Reserve Bank, or the Fed for short, sets
the benchmark for interest rates in America. When the Fed increases interest
rates, your payments on your mortgage, your student loans, your car loans, go up. The
bright side here is that the interest rate on your savings account goes up too.
When the Fed lowers interest rates then the payments on your mortgage, your student
loans, and your car payments, come down. But that also means that the interest
rate on your savings account comes down so your bank will pay you less
on your savings. After the 2008 crash, the Fed cut interest rates drastically to
stimulate the economy because they made it easier and cheaper for people and
businesses to borrow money. Interest rates stayed close to zero for years, but
then in 2015, once the economy started to recover, the Federal Reserve started
increasing interest rates again, and they kept doing this through 2018, and then in
2019, the Federal Reserve took a u-turn, and then they started cutting interest
rates agai. To put it in perspective, in the mid-1980s, a savings account would pay
you something like 7% a year, but a mortgage would cost you something like
12% in interest a year. In the mid-1990s, a savings account would pay you
something like 5% a year on your money, but a mortgage would cost you something
like 8% a year. And now here in 2020, a traditional savings account will pay you
less than 0.1% a year. That's 0.1% in interest a year. But a mortgage will cost
you something like 4% a year. But, what I want you to understand is that, right now,
you don't have to blindly accept these super low interest rates on your savings
account because three: Some banks are getting with the times.
Ever since Amazon came online and took borders out of business in 2011, more and
more businesses are starting to come onto the internet because they've seen the
power of the internet. I mean, the internet is great because one, it is
cheaper for businesses to operate, it is more convenient for customers, and it
allows businesses to access more customers. Well, finally some banks are starting to
see and do the same thing. Your traditional brick-and-mortar banks have a lot of
overhead. You have to pay for rent at these really, really nice buildings, you
have to pay for the salaries for their tellers, and bankers have to sit there
and wait for you to come in. You have to pay for electricity to keep the lights
on, and you have to pay for all the lollipops. With these higher expenses
come lower interest rates on your savings. But, thanks to responsive CIT
bank, you can move your money to an online savings account, you can get a much
better interest rate, and you can pay no monthly maintenance fees. It is really
easy to open an online savings account, and it's very quick; I know this because
I bank with CIT bank. Once you open a free high
interest savings builder account, you can transfer some of your savings
there, and then you'll start to get this higher interest, and everything is super
easy to track because they have a mobile app, so you can see where your money is,
and you can see how much interest you're earning every single month. Plus, your
money is safe because cit bank is FDIC insured. I mean, they're a real Bank. The
main difference is, they're online so they have less overhead, so they can pay
you higher interest. That means your savings can earn you more money.
Conditions do apply, so if you want to learn more and see how much more you can
earn on your savings, I got the links to where you can do that in the description
a partner with CIT Bank so if you use them, we will get compensated, but there's no
additional cost to you. It's free to open account, and it's free to save your money
there, so if you wanna learn more, and you want to see what their current interest
rates are on their savings builder accounts, I got the link to where you can
so that in the description below. And number four: Traditional banks don't
feel the need to pay you anything. Look, let's look at this practically. A lot of
your traditional brick-and-mortar banks have been in business for a long, long
time. That means they have a lot of loyal customers who have been with them for
decades, and they like coming into the bank and depositing their checks, and
asking their banker all their financial questions. Hey George, listen to me. Look,
I think you should take out a home equity line of credit, that way you can finance
that boat you'd be dreaming about, and we got a great promotion going on right
now. So not only do they not want to pay you anything, but they don't feel the
need to because George keeps coming in to finance new boats. If you don't
believe me, just look at the numbers. Between 2015 and 2018, interest rates
didn't go up one time or two times or five times, they went up nine times, but
the interest rate on your savings account at most traditional banks
didn't budge. They stayed at nothing. We're living in a time where people are
just used to getting nothing from their savings account. I mean, it's just normal
for your bank not to give you anything. Maybe this will change in the future as
more and more people go to online banks, but who knows? But until then, you don't
have to be stuck getting paid nothing. Remember, I got the information to how
you can get higher interest rate on your savings in the description.
Thank you for watching. If you enjoyed this video, share it with one friend, that
way you can help spread the word. I hope you enjoyed learning more about why
banks are paying you nothing, but if you want to learn more about how the banking
system actually works, I already broke this down on YouTube, and you can watch
it by clicking this button, right over here. Thank you for watching, and as