American Express Company (AXP), Capital One Financial Corp. (COF): Why the Best Money Market Rates, Are So Pathetic

For banks, those low rates have been extremely lucrative. On one hand, Bank of America Corp (NYSE:BAC), Wells, and U.S. Bancorp (NYSE:USB) have been able to retain money market deposits at next to no interest cost, helping provide valuable cash to turn around and lend at higher rates. Moreover, the increased mortgage refinancing activity that low rates have spurred has boosted their bottom lines as well. Even for AmEx and Capital One Financial Corp. (NYSE:COF), which have been willing to pay a bit more to attract savings to their online banking operations, being able to pay less than 1% to savers allows them to keep their margins high.

What you can do
Unfortunately, the options savers have in the current environment are limited. Many people seeking more income have taken money out of savings and bought higher-yielding dividend stocks, but by doing so, they’ve gone from a risk-free federally insured guarantee of getting their principal back to a much riskier investment that can produce substantial losses.

Digging for the best money market rates among banks hasn’t been nearly as lucrative as it once was. As long as the economy maintains its sluggish pace of recovery, money market accounts aren’t likely to start paying you much more in interest anytime in the near future.

The article Why the Best Money Market Rates Are So Pathetic originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns warrants on Wells Fargo and (NYSE:WFC) Bank of America. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends American Express and Wells Fargo. The Motley Fool owns shares of Bank of America and Wells Fargo.

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