Advertising Disclosure
  1. Home
  2. Community
  3. Ask
  4. HSA Rates Still In The Toilet, Why?

HSA Rates Still In The Toilet, Why?

racecar
  |     |   616 posts since 2014

Interest rates have finally started to climb. Everywhere you look you see local 3% CD deals now (even a 4% deal nationwide available a few months back). Money Market rates are soaring, some more than others, but still, they're going up, up, up. But HSA rates are still in the toilet -- exactly where they've been for the last few years. The credit unions that had decent HSA rates a while back DRASTICALLY cut the rates a few years back, but unlike any of the other products (CDs, money market, IRAs etc) I haven't seen ONE INCREASE in HSA rates anywhere. Is it just me? Has anyone seen HSA rates actually increase?

Is it because they figure people are somewhat "locked in" and won't want to switch? I have had no problems switching in the past, when credit unions drastically lowered their rates. I switched twice in the many years I've had my HSA. I'm now at a credit union that has one of the "best" rates, but that "best" rate is pretty pathetic.

If anyone sees any HSA rate increases, please post on it. I know it's a smaller niche than CDs or MMAs but there are still a lot of us with HSAs. Note that I won't consider any HSA with any kind of monthly/yearly/upkeep fee. There are plenty of them out there... they all had decent rates when interest rates were higher, then like everything, the rates dipped. But as rates for everything else are coming up everywhere again, I don't see one HSA increase...

  Post an answer
10


Answers
steved
  |     |   24 posts since 2014
I'd guess most HSAs tend to be small, so they're not very profitable for banks unless they can pay a relatively low interest rate. Unlike checking accounts, they probably haven't proven to be good loss leaders in attracting other business to the bank.

If you don't have a lot of HSA transactions, take a look at Saturna's brokerage HSA. They have no annual fees and let you invest your balance in stocks or bonds/bond funds (but do charge for trades). For example, Vanguard's Short Term Corporate Bond ETF currently yields 3.3% with an average maturity of 3 years.
Reply
2
RJM
  |     |   499 posts since 2011
Mine is still at LMCU and while they hinted a year or so ago that they might increase them, nothing yet.

I saw one credit union with a higher rate but I think I am just going to put mine in an index fund or three. I think they require you to leave so much in the savings which would not even get the 1% rate. The index fund option is risky but I should be adding to it for a number of more years and over the long run, I should outperform cash. There is a fee but the fee is spread pro-rata over the accounts at the end of a year, I think. I think it was $15 or something.

I screwed up this year and bought the wrong plan. No HSA is allowed so LMCU was great about reversing my error. Also, while they do allow you to buy CDs within the HSA. I did it on my own without realizing I needed a rep to do that for me. Again, they were good enough to reverse the problem I caused and waived the penalty for my mistake. Because of that, I am inclined to leave it where it is rather than chasing a half point more at a new credit union that may require a fee to join some organization.
Reply
1


The financial institution, product, and APY (Annual Percentage Yield) data displayed on this website is gathered from various sources and may not reflect all of the offers available in your region. Although we strive to provide the most accurate data possible, we cannot guarantee its accuracy. The content displayed is for general information purposes only; always verify account details and availability with the financial institution before opening an account. Contact [email protected] to report inaccurate info or to request offers be included in this website. We are not affiliated with the financial institutions included in this website.