Goldman Sachs boosts rates on Marcus accounts as banks fight for deposits

Christopher Goodney | Bloomberg | Getty Images

Employees work on the Marcus by Goldman Sachs Group Inc. floor of the bank’s headquarters in New York, U.S., on Tuesday, Nov. 22, 2016.

The stock market may be tanking lately, but at least savers are getting paid more to park their money.

Goldman Sachs is the latest bank to boost interest rates for savings products. Its Marcus consumer finance arm will pay online savings account users a 2.25 percent rate starting Friday, an increase of 20 basis points. The rate on its 1-year certificate of deposit rises 10 basis points to 2.75 percent.

Banks are jockeying for deposits because they’re a cheap form of capital to make loans. But after three years of Federal Reserve rate increases, competition among online banks and smaller institutions has grown fierce, and some analysts worry that that could threaten the industry’s profitability.

If the Fed continues to hike rates, top accounts could yield almost 3 percent by year-end, according to Bankrate.com chief financial analyst Greg McBride. A year ago, it was about 1.5 percent, he said.

“There’s definitely a price war among the most competitive banks,” McBride said. “Banks are leapfrogging each other to be at the top of the heap. If it gets more people saving, that’s a good thing.”