This afternoon, the US Federal Reserve cut its benchmark interest rate by 25 basis points. The Federal Open Market Committee decided to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent due to muted inflation and the “implications of global developments for the economic outlook.” The move was widely anticipated.
While most traditional bank savings rates have staggered along at near zero thus representing no real rate of return. For example, Chase offers a paltry 0.04% return (as of October 29). Some digital banks, which benefit from a lower cost structure in contrast to old banks, have promoted far higher savings rates to encourage new accounts
Earlier this month, Fintech Robinhood announced new savings accounts that earned 2.05% interest – one of the highest in the market. The rate was designed to lure more users to its bank-like service.
Today, that rate moved lower.
In an email shared with Crowdfund Insider, Robinhood said, effective today, the Cash Management interest rate has been adjusted to 1.80% from 2.05% Annual Percentage Yield. Robinhood matched the Feds actions dropping the rate 25 points lower.
Robinhood did note that if the Federal Reserve announces an increase to the rate the savings rate could go higher. While I would not hold my breath on rates rising anytime soon, Robinhood still offers one of the highest savings rates in the market – especially in contrast to traditional banks. But there are Fintech competitors that are currently offering higher rates. Marcus currently shows rates at 1.90%. Varo Money offers 2.02%. But for how much longer?