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It’s customer passivity that enables banks to treat savers like chumps.

lolostock/Getty Images/iStockphoto

A reader has asked a question that I know is on the mind of anyone trying to do the right thing by saving money. "If the Bank of Canada has hiked interest rates by 0.75 of a percentage point in the last year, has there been much of an increase in savings rates from our banks?" this reader wonders. "If not, is it just more profits for them?

The short answer is no and yes. No, there has not been much of an increase in savings rates. Yes, this means more profits for the banks.

After last week's increase, the Bank of Canada's trendsetting overnight rate is a total 0.75 of a percentage point higher than it was at mid-year 2017. The online bank Tangerine has increased the interest rate on its savings account by 0.2 of a point last summer – to 1 per cent. The big banks now pay as much as 0.9 per cent on savings accounts, up from 0.5 per cent last summer.

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Interest rates on variable-rate mortgages, lines of credit and floating rate loans are adjusted immediately when the overnight rate moves higher, and by the exact same amount as the increase. Why don't savers get similar treatment? Certainly, it's good for profitability if a bank charges more to lend while making only minor increases in the interest paid on deposits. But there's a limit to how much we can blame the banks here. It's customer passivity that enables banks to treat savers like chumps.

As of early this week, savers could get 2.3 per cent from EQ Bank, 2 per cent from Hubert Financial, 1.95 per cent from Alterna Bank, 1.9 per cent from AcceleRate Financial and 1.85 per cent from Achieva Financial. When enough people migrate to these higher paying accounts, the big banks will counter with more competitive rates. Until then, expect rate increases on bank savings accounts to be disappointing.

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Rob's personal finance reading list…

Five reasons to stay away from Bitcoin
My e-mail flow from readers tells me a growing number of everyday investors are feel frustrated about missing out on the big gains made by some people in cryptocurrencies like Bitcoin. If you're tempted, read this warning from the sensible people at Consumer Reports.

Read this before buying a house
Long-time home owners will relate to the story told in this blog post about a more-complicated-than-expected job of replacing a leaking dishwasher. People looking to buy a home can consider it a textbook lesson on the surprise costs that crop up when you own a house.

Save money at Disney World
Budget travel expert Barry Choi on how to cut costs when visiting Disney World in Florida with your family. He notes that there's a deal on until Feb. 10 – save 20 per cent when purchasing tickets for four days or longer.

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Why you should stop slouching
Here's a list of 11 "body language mistakes" – fidgeting, slouching, doing weird things with your hands and adopting a defensive posture. Offered up to help you present well at work and reap the financial rewards for doing so (promotions, raises, new jobs).

Today's featured financial tool
If you received a gift card over the holidays, check out this guide to fees, expiry dates and more. It's from the federal Financial Consumer Agency of Canada.

Featured Video
How to prepare for financial shocks in retirement

In case you missed these Globe and Mail personal finance stories
– Income splitting: Five ideas to consider

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– Protesting Trump: Why I just sold the last of my U.S. stocks (for Globe Unlimited subscribers)

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