Answer the questions from the article below:

1. Why can banks keep interest payouts on deposits low in the current environment?

2. Why do consumers often fail to seek out higher yields on deposits?

3. What pieces of advice do selected experts interviewed in the article recommend for retail investors?

Article:

The Federal Reserves campaign to fight inflation by raising interest rates seems to have reached nearly every corner of the economy except one: Americans savings accounts.

Mortgage rates doubled this year to nearly 7%, and it has become more expensive to get a car loan or carry a credit-card balance. Yet the interest on savings accounts barely budged. In March 2020, the average annual yield on a standard savings account was 0.1%, according to Bankrate.com. It fell to a pandemic low of 0.06% after Americans personal saving rate peaked, and is now up to a wan 0.14%.

U.S. commercial banks held $16.8 trillion in deposits as of June, according to the Federal Deposit Insurance Corp. Much of that vast sum sits in individual checking and savings accounts, earning little interest and losing significant value to inflation. There are savings accounts that yield as much as 3%, for those willing to shop around.

At a hearing on Capitol Hill last month, Rep. Michael San Nicolas (D., Guam) remarked on depositors underwhelming returns to the leaders of the nations largest banks. One of the only silver linings in a rising interest rate environment is that savers are supposed to be rewarded for their savings, he said. Theyre supposed to see the interest that they earn on their savings accounts go up.

In response, the bank chiefs said that they expected the interest rates on their customers deposits to increase in the future, based on the actions of the Fed and their competitors.

The countrys largest banks can keep payouts on savings accounts low because they seem to have plenty of deposits to cover their lending businesses for now and dont need to attract more by raising interest rates.

Some other banks are offering some of the most generous yields in years, but those still paying out meager interest can count on customer inertia: We fail to take advantage of better deals, because switching banks seems like a headache.

Were that dynamic to changethat is, if enough consumers took their money elsewhere in search of higher returnsbanks would be compelled to raise interest rates or make fewer loans, said Philipp Schnabl, a professor of finance at New York Universitys Stern School of Business.

Some banks, particularly online ones, have inched up yields in response to the Feds rate increases. The annual interest on an online savings account at Ally Bank rose from 0.5% in May to a chunkier 2.1% last month. As of Sept. 30, according to Bankrate, the highest-yield nationally available, FDIC-insured account was UFB Direct, which was paying out 3.01%.

Greg McBride, Bankrates chief financial analyst, advises shopping around. If youre looking in the right place, it is the best youve seen since 2009, he said. If youre just standing pat at the same place youve always had your savings, it probably doesnt look a whole lot different than 2021. (Bankrate earns money when customers open accounts using offers on its website.)

Even high-yield savings accounts are a weak buffer from 8.3% year-over-year inflation, but their annualized returns of 2% or 3% still beat a return of 0.01%. The median balance of a transaction account, which includes checking, savings and other accounts, was $5,300 in 2019, according to the Federal Reserve, the latest data available. Receiving 3% interest on that balance, versus 0.01%, would work out to a difference of about $160 a yearnot an enormous amount of money, but also not bad compensation for opening a new account, which can typically take about 15 minutes of work.

People with much larger balances stand to gain more, yet those depositors dont always bother to move their money. Tony Chan, a financial adviser in Orange, Calif., said he recently met with a new client who had about $1.2 million in an account earning 0.01% a year, or roughly $120. Mr. Chan said the money was previously invested in the stock market, but the client sold his holdings last year out of fear and has been too busy to find a good place to put it.

Mr. Chan recommended the client move most of the money into a higher-yield account and the rest into certificates of deposit. He estimates that these switches would yield at least $36,000 in interest annually.

Depositors inertia can be strong, to their detriment. In a study published in 2021, researchers analyzed the behavior of customers at five U.K. banks. The average customer stood to gain 123 a year, or about $190 at the time, from moving their money to a higher-yield account, yet the researchers found that switching is rare and that even customers with relatively large balances were no more likely to do so.

In a follow-up survey, 66% of respondents said that switching accounts would be worthwhile for them if they gained at least 100 in annual interest. But in one subset the researchers studied, despite the fact that 26% of customers could have gained at least that much by switching, only 3.5% actually switched.

The biggest reason consumers dont seem to reoptimize their finances seems to be a belief that it will be a huge hassle, said Christopher Palmer, a professor of finance at MITs Sloan School of Management and a co-author of the study. The study also found that customers tend to overestimate how much of a hassle it actually is, and underestimate how much their interest rate might increase.

Financial advisers consider it prudent for people to cart their money elsewhere if they can find a better offer. Savers can also consider safe high-yield alternatives to bank accounts, such as government I Bonds.

Mr. Chan advises clients to keep about one months worth of expenses in a checking account and to seek out a high-yield savings account for cash that they want access to in the next couple of years but dont need to draw on imminently.