Unfortunately it is not uncommon to find companies that choose to line their pockets at the expense of customers. I wish we could find companies that want to provide good value and make some profit by doing so. My stock broker used to allow clients idle cash to be invested and earn a reasonably decent rate (not Vanguard money market fund but you know for a company that doesn’t want to provide the best customer value a least something remotely approaching fair). This year (or last year) they stopped doing so and switched to the following rate structure:
Dollar Range Interest Rate Annual Percentage Yield
$0.01-$4,999 0.04999% 0.05%
$5,000-$24,999 0.04999% 0.05%
$25,000-$99,999 0.29959% 0.30%
You might think they make an error and mean 5% and just put the decimal in the wrong place but you would be wrong. It used to be leaving your money in money market accounts with the broker wasn’t great but the 50+ basis point hit was worth the convenience. Now HSBC pays 4.25% for online savings. So at 100 times what the broker pays they would be slightly higher than HSBC. Sorry paying 1/85 of what HSBC pays is not just talking a bit of your clients money for yourself. That is obscene. You can no longer trust that your stock broker will only talk 50+ basis points of you money market earnings. Take a look at your account and setup an account with HSBC, Vanguard (current yield 4.64%) or something similar that pays a reasonable rate for any short term savings.
If your broker pays less than 2% on a money market account of $5,000 that is a scary sign. What else they might be doing that isn’t so obviously unfair is difficult to know. Getting above 4% for a cash saving account now is pretty good, in my opinion.
Related: Customer Hostility from Discover Card – Frugality Versus Better Returns – Learning About Personal Loans