Chase savings accounts pay low interest because the bank sets rates based on what it costs them to borrow money, not on what's fair to you

Chase's savings rates are low for one straightforward reason: the bank borrows money cheaply from the Federal Reserve and other sources, so it doesn't need to pay you much to keep your deposits. When the Fed's benchmark rate is low, banks lower what they pay depositors. When it's high, they raise rates—but usually slower than the Fed moves, and they cut rates faster than they raise them. Chase, like most large banks, prioritizes lending profits over deposit rates.

Right now, Chase savings accounts typically pay between 0.01% and 0.04% annual percentage yield (APY), depending on the account type and your balance. That means $10,000 sitting in a Chase savings account for a year earns roughly $1 to $4 in interest. A high-yield savings account at an online bank often pays 4% to 5% APY on the same $10,000—earning $400 to $500 per year instead.

Chase doesn't have to compete aggressively on rates because most customers stay put. The bank has brand recognition, physical branches, and a large customer base that values convenience over yield. People keep money in Chase savings for the debit card, the app, or because they already have a checking account there. That stickiness means Chase can pay less.

Key Takeaways

  • Chase savings rates are set by the bank based on what it costs them to borrow, not on market competition or what depositors need.
  • Large banks like Chase pay lower rates than online banks because customers rarely move their money for a small rate difference.
  • The Federal Reserve's benchmark rate influences all bank rates, but Chase typically lags behind when rates rise and cuts faster when they fall.
  • You can earn 10 to 100 times more interest by moving money to a high-yield savings account at an online bank, though you lose branch access.
  • Chase's low rates are a trade-off for convenience—branches, customer service, and integration with checking accounts—not a sign the bank is struggling.

How the Federal Reserve rate affects what Chase pays you

The Federal Reserve sets a benchmark interest rate that influences what banks charge borrowers and what they pay depositors. When the Fed raises its rate, banks have more room to pay depositors more without cutting into profits. When the Fed lowers its rate, banks lower deposit rates—sometimes immediately, sometimes after a delay.

Chase typically waits to raise deposit rates until the Fed has already moved multiple times. In 2022 and 2023, when the Fed raised rates aggressively, Chase raised savings rates slowly and to lower levels than competitors. When the Fed began cutting rates in late 2023, Chase cut deposit rates faster than it had raised them. This pattern is standard across large banks: they move slowly upward and quickly downward.

The gap between the Fed's rate and what Chase pays you is called the spread. A larger spread means the bank keeps more of the difference between what it borrows at and what it lends at. Chase maintains a wide spread on savings accounts because it can—customers don't leave in large numbers over a 0.01% rate.

Why online banks pay more than Chase

Online banks have lower overhead costs than Chase. They don't operate thousands of branches, employ as many tellers, or maintain the same customer service infrastructure. That savings gets passed to depositors as higher rates. An online bank can pay 4.5% APY and still be profitable; Chase would need to cut costs dramatically to match that rate while maintaining its branch network.

Online banks also compete almost entirely on rate. They have no brand loyalty, no physical locations, and no checking account integration to keep customers. If you can earn 4.5% at Bank A and 4.3% at Bank B, you move your money. Chase doesn't face that pressure because most customers value the convenience of a nearby branch or the simplicity of having everything in one place.

The trade-off is real: online banks offer no teller service, no cash deposits at a physical location, and no face-to-face customer service. If you need to deposit a check by hand or withdraw cash without an ATM, Chase's branches are worth something. But if you rarely visit a branch, that convenience costs you hundreds of dollars per year in lost interest.

What happens to Chase rates when the economy changes

Chase's savings rates move in response to economic conditions, but with a lag. During recessions, when the Fed cuts rates to stimulate borrowing, Chase cuts deposit rates quickly to protect its lending margins. During recoveries, when the Fed raises rates to cool inflation, Chase raises deposit rates slowly because it doesn't need to attract deposits—people are borrowing instead.

In 2008, after the financial crisis, the Fed dropped its rate to near zero and kept it there for years. Chase's savings rates fell to 0.01% or lower and stayed there until 2022. Customers who kept money in Chase savings during that decade earned almost nothing, while inflation eroded the real value of their deposits. Online banks, which didn't exist in the same form then, later captured customers frustrated by that experience.

If the economy enters a recession and the Fed cuts rates again, expect Chase's savings rates to fall further—possibly back to 0.01% or lower. The bank will cut quickly to protect its profit margins on loans. If you're holding cash for an emergency or a near-term goal, that timing matters.

The difference between Chase savings accounts and money market accounts

Chase offers both savings accounts and money market accounts. Money market accounts typically pay slightly higher rates—currently around 0.04% to 0.05% APY—but require a higher minimum balance and limit how many withdrawals you can make per month. The rate difference is small enough that it rarely justifies the restrictions unless you have a large balance and rarely need to access the money.

Chase also offers CDs (certificates of deposit), which lock your money away for a set term—3 months, 6 months, 1 year, or longer—in exchange for a higher rate. A 1-year Chase CD currently pays around 4.5% to 5% APY, which is competitive. The catch is that you can't touch the money without paying an early withdrawal penalty, usually equal to a few months of interest. CDs make sense if you know you won't need the money and want a may provide rate.

How to compare Chase rates to other banks

Check Chase's current rates on its website under the savings or money market account pages. Write down the APY and the minimum balance required. Then visit the websites of online banks like Marcus, Ally, American Express Personal Savings, or Discover Bank and note their rates and minimums. The difference in annual interest will be obvious.

Use a calculator: multiply your balance by the APY and compare the dollar amount you'd earn at Chase versus an online bank. If you have $50,000 in savings, the difference between 0.04% at Chase and 4.5% at an online bank is roughly $2,200 per year. That's real money, and it compounds if you leave the money untouched.

Consider what you're paying for Chase's convenience. If you deposit cash frequently, use the branch for checks, or value having everything in one place, that's worth something. But if you rarely visit a branch and mostly move money electronically, the convenience cost is high relative to what you get.

What to do if you want higher interest on your savings

Open a high-yield savings account at an online bank and move your emergency fund or short-term savings there. Keep a small amount in Chase if you need branch access for cash deposits or checks, but move the bulk of your savings to earn real interest. You can transfer money between Chase and an online bank in one to three business days, so it's not inconvenient.

If you want to stay with Chase for convenience, consider moving money into a Chase CD for any funds you won't need for at least three months. The rate is higher than savings, and you know exactly what you'll earn. For money you might need sooner, accept that Chase's low rate is the price of keeping it accessible at a branch.

Don't keep large amounts of money in Chase savings for more than a few months if you have other options. The interest you lose compounds, and there's no reason to subsidize the bank's profits when you can move money for free.

Frequently Asked Questions

Will Chase raise savings rates if the Fed raises rates again?

Chase will raise rates eventually, but slowly and to lower levels than competitors. The bank will wait to see if the Fed's moves are permanent before committing to higher deposit rates. If you're waiting for Chase rates to become competitive, you'll be waiting years. Moving to an online bank now captures the higher rates immediately.

Is my money safe in a Chase savings account?

Yes. Chase is a large, regulated bank, and deposits are insured by the FDIC up to $250,000 per account type. Your money is just as safe at Chase as at an online bank. The low rate is not a sign of financial trouble—it's a sign that Chase doesn't need to compete for deposits.

Can I move my money to an online bank without closing my Chase account?

Yes. You can keep your Chase checking account and move only your savings to an online bank. You can transfer money between them whenever you need to. Many people do this to earn higher interest while keeping Chase for checking and bill pay.

What if I need to withdraw cash from my savings?

Online banks don't have ATMs or branches, so you can't withdraw cash directly. You'd transfer money from the online bank back to your Chase account and withdraw from there. This takes one to three business days, so it's not ideal for true emergencies. If you need instant cash access, keep your emergency fund split between Chase and an online bank.

Do Chase savings rates ever go up on their own, or only when the Fed moves?

Chase rates move only when the Fed moves or when competitive pressure forces the bank to act. Chase doesn't raise rates to be generous. If you see a rate increase, it's because the Fed raised its benchmark rate or because Chase lost enough customers to online banks that it decided to compete. This happens rarely and slowly.