Here's why rates on savings accounts haven't gone up as fast as on loans

Why are you getting virtually no interest on your savings?

After all, mortgage interest rates are nearly twice as high as they were at the start of the year, thanks largely to the Federal Reserve's decisions this year to increase its key rates.

Yet, the interest you're getting on your CDs and other accounts could barely be more than one-fourth of 1%.

"The rates of CDs and other bank accounts reflected the costs of banks' operations while the loan rates reflected banks' revenues. To maximize their profits, banks would raise loan rates quickly and CD rates slowly," said Tenpao Lee, professor emeritus at Niagara University in New York.

DepositAccounts.com estimated that the average one-year certificate of deposit was offering a 0.68% annual percentage yield. Shop around, it said, and you could find a 3.21% APY with a $5,000 minimum.

"Savings rates will never go up as much as what the Fed has raised overnight rates to," said Anthony Valeri, the director of investment management at California Bank and Trust.

All the rates are far below mortgage interest rates, which for a 30-year fixed-rate loan was recently at 5.92%, according to Bankrate.com. At the start of this year, the average rate was 3.4%.

That should mean higher rates for savers, said the experts, though it's unlikely they'll come close to matching lending rates.

"They're lagging more than in the past," said Ken Tumin, founder and editor of DepositAccounts.com.

One big reason is that banks have less than usual need for deposits. During the COVID-19 pandemic, people tended to save more of their money, so, even today, banks don't always need to woo people to deposit more funds by offering bigger interest rates.

The good news is that savings rates will climb.

"Savings rates are going up, if you look in the right place. Smaller banks and online banks that are eager for more deposits have been raising their payouts, and this has gained momentum as the Federal Reserve has been raising interest rates," McBride said.