Banks charge more than 6% on loans, but give less than 2% on savings accounts

One of the biggest business stories of 2022 has been the swift and startling rise in interest rates. This year we’ve seen seven consecutive rate hikes that have taken the central bank’s overnight rate all the way up to 4.25 per cent.

Consumers have been hit hard as they watched the interest rates they were charged on variable rate mortgages and lines of credit rocket up with the central bank’s rate. But one place we haven’t seen a big surge is in the interest rates banks pay consumers on money in their savings accounts.

When it comes to loans, the big banks have rolled the entire increase into the rates they charge. For example, my personal home equity line of credit (HELOC) with CIBC, which carries an interest rate of prime plus 0.5 per cent, cost just 2.95 per cent in March. But now it charges a 6.95-per-cent interest rate.