The coronavirus pandemic in the United States forced the Federal Reserve to cut rates close to zero in order to dampen the effect of the virus on the U.S. economy. In this unique time, Devenir has been observing how health savings account (HSA) providers have reacted to the rate cut. In the past, during times of economic expansion, we have observed that the deposit rates offered in health savings accounts have been less reactive to raises in the Federal Funds rate. However, with the recent rate cut, we have seen a decrease in the rates given to HSA account holders. This response has been seen at all levels, from accounts with one thousand to ten-thousand dollars.
Source: Devenir Research, FRED Economic Database
*Data used for 2015 and 2017 was interpolated.
Source: Devenir Research, FRED Economic Database
*Data used for 2015 and 2017 was interpolated.
The market average continues to be higher than the average of the top 20 HSA providers, suggesting that smaller providers may feel pressure to maintain higher rates in order to attract new business.
We continue to be interested in HSA deposit rates and look forward to sharing new insights! From all of us here at Devenir we wish you peace and good health during this challenging time.
Note: Data above represents Devenir’s assessment on readily available public data, for specific interest rates that apply to your HSA, please contact your HSA provider.