How We Think About Rates

We sat down with Marcos Rosenberg, head of our US Consumer Deposits business, to get his perspective on creating long-term value for customers. 

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In terms of Marcus’ savings business, how do you think about rates? 

Marcos Rosenberg: As a savings business, we strive to offer you rates that are among the best available. Marcus offers two types of products to help customers reach their savings goals: fixed-rate and variable.

Our High-Yield CDs and No-Penalty CDs are fixed-rate products that allow customers to lock in a particular rate for a set amount of time. On the other hand, our Online Savings Account is a variable-rate product. The rate on this account can move either up or down for a number of reasons.

That being said, the rate for our Online Savings Account is four times the national average – and we have no plans to change that standard.

What does Marcus consider when setting rates?

MR: Our team is incredibly focused on determining the right rate for our customers. There’s a lot that goes into our thinking and there are a number of variables that we consider. Here are some of them: 

The value we offer customers over the long term

As we have said, we aim to consistently offer highly competitive rates. We plan for that to be the case for decades to come. To do this, we have to determine the right rate today so that we can continue to provide value in the future. It’s a delicate balance and we try very hard to get it right.

The fed funds rate

The Federal Reserve (the “Fed”) controls the federal funds rate (the “fed rate”). Generally, it’s the interest rate at which banks and other depository institutions lend money to each other. There’s a lot of complexity here, but generally, whenever the Fed changes its rate, it can impact all of us. For Marcus, we consider any changes to the fed funds rate when determining the rates we offer customers.

The expectation of the fed rate

Not only do we look at the fed rate, but we also look at what the Fed indicates about its rates moving forward. Even if the Fed doesn’t raise or lower rates, they often signal how they may adjust rates in the future. 

What our competitors are doing

We look at other banks offering high rates to see how we compare and to understand what’s going on in the industry more broadly. We’re here to compete. 

Will the rate for the Online Savings Account fluctuate in the future?

MR: Like many savings accounts, the rate for our Online Savings Account is variable and can go up or down. That means we’re constantly reviewing our approach and evolving how we set rates for our customers.

Whenever we change our rate, just know it’s been a carefully thought-out decision.

Ultimately, no matter how we adjust our rate, we’re confident that it will still be highly competitive. 

Why should I keep my money with Marcus when other banks have a better APY?

MR: I understand if you want to choose your bank based on who is offering the highest rate today. But rates fluctuate. Many new entrants in the savings space are pushing high rates today to grow their business quickly, but will those high rates last? Will those new businesses even last?

That’s why I encourage customers to look at the full value they’re getting with a savings account and the philosophy behind it.

The biggest advantage we bring to customers is the fact that we are part of Goldman Sachs. We’re talking about a financial institution that has been helping clients for 150 years. Very few companies, let alone banks, can say the same.  

We offer competitive rates. We offer long-term value. Period.

You can see this in everything we do. We offer the same rate to all of our customers, regardless of their balance. Money you deposit with us is FDIC insured. For our Online Savings Account, we don’t charge fees and we don’t have a minimum balance requirement. And our experienced, US-based customer service teams – these people are the backbone of our business and can ensure that you get the help you need by phone.

So it goes back to the earlier question – will a new financial institution offering today’s highest rate last? And will it be able to offer the highest rate for the next 10, 15, 20 years?

To us, helping you reach your savings goals shouldn’t be about making a quick dollar today. It’s about building a relationship you can trust to help you achieve financial well-being over the long run. And we’re in this business for the long run.

Marcos Rosenberg is head of US Consumer Deposits for Marcus by Goldman Sachs.

The National Average is based on the APY average for high-yield savings accounts with a minimum balance of at least $2,500 offered by the top 50 U.S. banks (ranked by total deposits) as reported by Informa Research Services, www.informars.com. Informa has obtained the data from various financial institutions that it tracks and its accuracy cannot be guaranteed. All APYs are subject to change. National Average rate effective as of July 30, 2019. Our rate for purposes of this comparison as of July 30, 2019.