Pod Insights The Clark Howard Podcast 03.04.26 How Interest Rates Are Set / Name Brand Foods Cut Prices About this episode Today, Clark explains the confusion around how various interest rates are set, from savings & CDs, to credit cards and car loans. He explores the "K-shaped" economy, where a flood of cash into savings and CDs drives down returns – even at online banks, and how the "convenience trap" can cost consumers thousands on all kinds of loans. Also, good news at the grocery store: the "store brand revolution" is working. After years of price hikes, name brand giants are finally slashing prices on snacks to win back customers. How Interest Rates Are Set : Segment 1 Ask Clark: Segment 2 Groceries: Big Brand Price Cuts: Segment 3 Ask Clark: Segment 4 Mentioned on the show: My 7 Rules for Using Credit Cards - Clark Howard Best Place to Get a Car Loan - Clark Howard How To Buy a House in 9 Steps - Clark Howard NYT: After Years of Increases, PepsiCo Pledges to Cut Prices on Snacks Are Car Wash Memberships Worth It? - Clark Howard What Is Umbrella Insurance and Do You Need It? - Clark Howard 5 Ways To Start Living Below Your Means - Clark Howard The 7 Money Habits of People Who Become Wealthy - Clark Howard Clark.com resources: Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript 0:00 Speaker 00 Your sausage McMuffin with egg didn't change, your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.
0:12 Speaker 01 Price and participation may vary. Promotion pricing may be lower than meal pricing.
0:15 Speaker 02 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats, order now. Terms apply. Product availability varies by region. See app for details.
0:50 Speaker 03 Thanks so much for taking time out of your day to join us here on The Clark Howard Show. Our mission is to serve you with advice and information that empowers you to make better financial decisions in your life. In today's episode, I'm going to explain something I get so many questions about. How are interest rates set for savings, CDs, auto loans, credit cards, mortgages, home equity lines of credit? How are these rates done? Is there a group of bankers that meet in secret at some private club and conspire to
1:34 Speaker 03 set rates a certain way? I know a lot of people believe in conspiracies. Nope. I'm going to tell you how that all plays out. And also, we're in an odd time with the prices of things right now. More and more things we gotta have have gotten so much more expensive, but a lot of things we just want to have are now actually dropping in price. I want to talk about that later. So, so much about how much interest rates are or little for different things. Have you noticed that what you can earn on savings has been going down?
2:19 Speaker 03 But what you pay on a credit card for interest is really, really high.
2:27 Speaker 03 How do these things happen? Okay. The amount of money that people have squirreled away in savings accounts and CDs, money market accounts, it's at record highs because we are in a K economy where some people are really struggling, many people, struggling month to month, just to pay their bills. And then other people, that's why it's called the K, you know, the how things diverged, people who make more money, have invested more money, have more money on hand on average than they've ever had. There's a huge gap, even more than in income, there's a huge gap in assets of different people.
3:12 Speaker 03 So there's so much money flooding into savings accounts and CDs and money markets, and that has pushed the rates down on these. It is a straight supply and demand thing. But even with supply and demand, there's a giant difference in what you earn on savings at a traditional bricks and mortar branch of a bank, particularly if you're looking at one of the four giant monster mega banks, which are Chase, Citi, Wells Fargo, and Bank of America. Those four account for a little bit more than half of banking in the United States.
3:55 Speaker 03 And they really insult your intelligence with what they pay on savings, which no matter what happens with interest rates in the marketplace, the interest they pay is generally 1/100 of 1% on your savings. Their CD rates, pitiful, and they don't respond to the marketplace because a lot of people go to these four banks just for convenience. Are these four banks conspiring together? They don't have to. They know a lot of people just go for the convenience of one of these four recognized brand names.
4:37 Speaker 03 And basically get ripped off on your money that you're putting on deposit with them. On the other hand, on land banks, credit unions, and particularly smaller local banks pay more based on the supply and demand of the marketplace. But even their rates on savings and CDs have declined of late because of the flood of cash coming in. Credit cards do not respond to interest rates in the marketplace because of consumer behavior. Consumers, when they take out a credit card, convince themselves they're not going to run balances. Okay, here's a challenge.
5:21 Speaker 03 Okay, you're a TV reporter looking for a story? Ask 100 people to tell you what the interest rate is on a credit card they're carrying. And I would say out of 100, maybe two, maybe, could tell you the interest rate they're paying on a card. Think about how often I talk about when people are in debt, writing down what your debts are and what the interest rates are. Because essentially, nobody knows what they're paying in interest. Do you ever see a bank say, "Hey, get this card because we're excited to charge you 26% interest on it."
6:05 Speaker 03 Or you're in a store and they say, "Wouldn't you like to save 10% on your purchase day with our in-store credit?" Do they tell you that the interest rate on that card is 36%? They do not. The only people in the credit card marketplace that promote interest rates on cards are credit unions because they're owned by their members. And that's why the average credit union credit card interest rate is half what it is at a bank. But you probably don't know that because you've never looked to see what the interest rate is on the credit card you're carrying a balance. So I gave you three examples so far.
6:45 Speaker 03 To where consumer behavior is what allows interest rates to be where they are. Basically, nothing on savings at a giant monster mega bank. Extremely high interest rates on credit cards because we don't even want to know what the interest rate is. And then other things we're really focused on. Let me give you an example where it really matters to focus. Vehicle loans. The gap between a vehicle loan taken out at a credit union, a bank, or at a dealer. It's a huge gap. By far, the lowest rates are credit union loans.
7:26 Speaker 03 Do you know a number of credit unions now are writing long-term vehicle loans at 4. something percent? Well, the average loan at a dealer is more than 10. Bank loans more like seven or eight. But there's a trick here, too. Watch automobile ads. A lot of them are promoting right now 0% financing on vehicle loans. And those could be a good deal for you. If you check out what do you get in cash as an alternative? Instead of the 0% financing, you got to weigh that. So you getting the theme yet? What's the theme? Because I haven't even talked about mortgages. Because mortgage rates are set a whole different way in the marketplace.
8:09 Speaker 03 But there's even a lot of difference in mortgages from one place to another. And a lot of people only go to a single mortgage lender. Overwhelmingly, people go to a single mortgage lender and don't comparison shop. That is the key with borrowing. With almost any loan product and with savings, almost any savings product. If you only look at convenience. If you don't shop around. If you go to a car dealer to buy a vehicle new or used. And you didn't arrange your financing in advance and comparison shop. I guarantee you, you're going to be ripped off. Period.
8:52 Speaker 03 It is up to you to shop the marketplace.
8:56 Speaker 04 Okay, we've got some questions for you, Clark. Scott in Ohio says, "I'm 34 with a family of four. I have a credit score of 660. I've turned away from all the bad money habits that you made me aware of, and thank you for that guidance. I'm now ready to buy my family our first home, but I'm worried that if I apply and get denied, it will hurt my credit more. How do I know when it's my time to apply? And should I go through my credit union or an online lender I see ads for?"
9:24 Speaker 03 Okay, this is a great question, Scott. So you've been healing your credit. You're now in the mid 600s, and that number will move around based on what type of credit score, which bureau, and all the rest. But you're comfortably in the mid 600s, let's say. So what that qualifies you for is an FHA loan, if you're a military vet, a VA loan. And there are certain lenders that welcome and participate heavily in the FHA loan program. Could be a credit union, could be a, more often, a local bank. Big banks, they don't want to be bothered.
10:09 Speaker 03 Could be a mortgage broker. What you do is you scout around for this on the websites of various lenders. And you see if they say, "We specialize in FHA loans," is an example. Because to qualify for most conventional loans, you're going to need a credit score that is often 700 or above, maybe 680. Where you are, you're closer to that 680 now. But the FHA loan product, again, if you're not a veteran, may be the best place for you to go for that first loan.
10:52 Speaker 03 And I heard what you said about possibly hurting your credit by applying and getting denied. Generally, a lender who's experienced in FHA loans will be able before they apply to check you out, what's known as a prequalification, and be able to tell you, hey, you look really good to go here. So you won't have that denial that you're worried about. And I hope that the search for that first family home goes well. And I want to congratulate you for the hard work you've made to deal with past credit issues to steadily heal your credit standing.
11:33 Speaker 04 Sean in Illinois says, here's how sophisticated these bad actors have become. I applied to a very legitimate job posting on one of the large job boards. I even recognized the company. After reading the description and qualifications, I submitted my resume through the job boards application. A couple of days later, I received a text from the company requesting for me to click a link to provide additional personal information. I deleted this message, but did not block. A day later, at around 10:00 PM local time, I got a second text from this number, which, when I tried calling, was not in service with a more demanding tone to follow up and provide additional information. This time, I blocked the number. Never click on a link and always be careful when you get recruiters contacting you. Clark, you and
12:18 Speaker 04 Wes should have won best podcast, not Amy Poehler. That's the Golden Globes. They gave a podcast award this year.
12:25 Speaker 03 I'm sorry. I don't know who she is.
12:27 Speaker 04 Oh, she's, she used to be on SNL. She's an actress and comedian, and she has a podcast, and she's great.
12:33 Speaker 03 Oh.
12:34 Speaker 04 My favorite podcast was also up for it, Armchair Expert, but they did not win. We're going to submit next year, Clark.
12:42 Speaker 03 Oh, we are?
12:42 Speaker 04 Yeah, why not?
12:44 Speaker 03 They'll say, who's that, Clark?
12:49 Speaker 03 No offense to Amy.
12:51 Speaker 04 Polar.
12:52 Speaker 03 Polar. I know nothing about popular culture. I mean, you could ask me, you could ask me, like I said, out of 100 people, two would know their credit card interest rates. You could ask me the names of 100 people in popular culture, and I might know.
13:09 Speaker 04 Right.
13:10 Speaker 03 Two of them.
13:10 Speaker 04 But once in a while, you'll pull one out, and it shocks us all.
13:13 Speaker 03 Really?
13:13 Speaker 04 Mm-hmm.
13:15 Speaker 03 So, this thing with the job sites and the scammers being on them is a huge problem. I want to congratulate you so much, Sean, that you did not get ripped off by them, all these people impersonating big, well-known, recognized companies. You have to be so thorough and careful before you ever provide personal information. The scams are pretty clear. They are either trying to, they work two different methods of operation. Usually, they're not trying to steal money from you. They're only trying to steal your personal information, get you to fill out something where they get your social security number and other
13:55 Speaker 03 stuff to engage in a full-on identity theft, or they may con you into paying them money, but that's less frequent.
14:04 Speaker 04 Dan in Ohio says, "I'm struggling with my eight and 10-year-old. They get invited to a friend's birthday party or sporting event with a friend, and I want them to have some money to buy a snack and pay for their entrance fee. More places are becoming cashless. They're young, and I don't want them to have a credit card with a large limit. Is there an inexpensive way for my child to have a $20 credit card? Many of the options have monthly fees of $5 plus. Someone said to buy a Visa debit card, but those also have an initial fee of $2 to $3. Any ideas?"
14:34 Speaker 03 Yeah, and the Visa debit card is one that's a stored-value card. There have been a lot of problems with theft of funds from that product. I would not do one of those. The marketplace is now offering many, many options.
14:52 Speaker 03 For children, your children's ages, sub teen, this case, eight and 10, where they can have a debit card linked to a small savings account at no fee. And this is something a lot of smaller banks do and credit unions. It's kind of made to order for you. One of the largest banks in the country, USAA Federal Savings Bank, for people who are USAA bank account holders, you can open a free child savings account that ties into a debit card that would give your eight and 10 year old a way to buy things where you go.
15:34 Speaker 03 Then there's another series of products from fintechs that are not actual banks. And they're the ones that offer programs where you usually have to pay them somewhere around 60 bucks a year for supposed financial controls and financial education. We, among ourselves on the staff, have argued about the utility of these and the advantages they may offer in return for the fee. I'm unconvinced. So I would like for you to look at one of these programs where you could open a very small savings account for each child and they have the debit card that they can use.
16:15 Speaker 03 Yes, I know that you've heard me talk about all the dangers of the piece of trash, fake Visa, fake MasterCard. But in this case, you're lowering the risk enormously by having it tied into one of these free, very low balance child savings accounts. Coming up ahead, I got actually good news on the price front. After we've been battered around in some price categories for the last nine years, others for about the last seven, things are looking better in a number of areas. And I want to give you an example of that straight ahead.
16:58 Speaker 00 Your sausage McMuffin with egg didn't change, your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5, only at McDonald's for a limited time.
17:10 Speaker 01 Pricing participation may vary. Promotion pricing may be lower than meal pricing.
17:13 Speaker 02 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats, order now. Terms apply. Product availability varies by region. See app for details.
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19:13 Speaker 03 If I own a brand name company selling packaged goods in the supermarket or in the aisles of a discount store, I am in a crisis because Americans have changed their buying habits. And after relentless price increases on brand name goods, those prices are now reversing. Not anything back to in the wayback machine to the teens, you know, the last decade, but they are coming down. And when I read about the financial
19:53 Speaker 03 results and what they're telling Wall Street at all these packaged good manufacturers, the story is virtually identical from one brand name product company to another, to another, to another. They are seeing market share losses and your friend has turned out to be store brands in all different categories. I've been obsessed with store brands pretty much for 50 years. I love how they create competition in the marketplace and how today the amount of purchases as a percent of what people buy is shifting, market share
20:35 Speaker 03 is shifting steadily, food and non-food to the private labels. And this is putting such pressure onto the brand name goods manufacturers. And I told you about a year ago that Costco came up with Kirkland Signature specifically because they were frustrated with the price increases that the brand name goods manufacturers were pushing onto Costco. And they were like, no, we gotta stop this. And they have now made Kirkland Signature one of the most successful brands in the world. Think how weird that is.
21:18 Speaker 03 That a store brand is now more successful than most brand name advertised brands that are well-recognized. And now, one-third of Costco's sales are Kirkland Signature. And I could take different retailers and tell you the same story, how they have been able to fight back against these brand-name behemoths by being effective price competition for them. And you and I, as consumers, you know, we figure out which store brands are good and which ones aren't. We change our habits and what we buy, moving away from the brand name when
22:03 Speaker 03 there's an effective, quality, and priced store brand. So what that's doing is it's now doing what it's supposed to do. The brand-name manufacturers are having to respond to the marketplace. Still not to the price point of the store brands, but across product categories, prices are being cut. Now, I think of an example I saw from an analyst in a story about why Coke and Pepsi have been so successful pushing prices for their soft drinks higher and higher and higher, and other brand-name products have not been successful like that.
22:47 Speaker 03 And the reason is like, oh, yeah, it's the one product category where store brands have never been accepted by the marketplace, that people have never liked the taste of look-alike products to the brand-name products that Coke and Pepsi make, which is why they've been able to continue to push prices up, and other brand-name manufacturers have not. It is another way of making my point that store brands are your friend.
23:22 Speaker 04 All right, we'll go to questions. Heather in Nevada says, "You've taught us to be frugal and therefore we always buy the cheapest option for a car wash. Is that good enough, or should we sometimes splurge to get the best one? And does it matter?"
23:36 Speaker 03 So, car washes, you know, it's all about getting you to sign the monthly membership. And a monthly membership will be the same price or less than two washes of a basic wash. And then the whole thing then is the sell-up. Well, Heather, my attitude, and remember, I will always accept lower quality for a lower price. So you're not getting a fair perspective from me. But I would always do the cheapest car wash that's available, or if you're doing a monthly plan, the cheapest monthly plan. Because you're going to get the car clean, you're not going to get all the fancy doodads
24:17 Speaker 03 on, you know, every feature of the car that the sell-ups are for. But I think the lead price car wash is just fine with me.
24:28 Speaker 04 Katie in Tennessee says, "I recommended your show to a friend. She listened and had a question asked on the air. Laura from Tennessee. She's now considered a celebrity in my family. We are all Clarkies." Well, Katie, now you are a celebrity in your family. "My husband is active-duty Army, so we're long-term renters and have lived in five states over the past four years."
24:49 Speaker 03 My goodness, my goodness, let me stop you right there. Civilians have no idea the sacrifices of the brave men and women who volunteer to join the US military. Not just potential danger on a battlefield somewhere, who knows where in the world, but also the disruptions of family life. Five moves, five different states in four years? Wow!
25:19 Speaker 04 And she says, "We carry maximum coverage on our auto insurance and we have saved approximately $1 million in brokerage and retirement accounts." Roth, of course.
25:27 Speaker 03 Very impressive.
25:29 Speaker 04 "Given our situation, should we consider an umbrella insurance policy?"
25:34 Speaker 03 Yeah, you have enough assets that an umbrella would make sense. I call it a success tax. Very unusual for if the low wages we provide military personnel, that a military family would have an asset base of more than a million dollars. Tip my hat to you. Amazing. So yes, having an umbrella policy tied in is a great idea. They are, although we've had some feedback on the price points, I've said they're usually a couple hundred dollars a year for a million dollar umbrella. And the whole idea is to protect you. The reason they're so cheap,
26:17 Speaker 03 even though the coverage is so great, is the chance that something will happen where you will be sued and somebody would wipe you out is so low. If it happens, it's horrific because you've worked so hard to build up this wealth. That's why you get an umbrella.
26:35 Speaker 04 And recently I've heard from a couple of Clarkies that USAA has gotten or getting out of the umbrella insurance policy business. But if you already have one, you can
26:45 Speaker 03 You're grandfathered in. Yeah, you know, I used to be USAA insured and now I'm not. After I started with USAA in the 1970s. And so I'm losing, I still have accounts with USAA, but they don't insure me anymore. And I'm losing touch with how USAA insurance works.
27:09 Speaker 04 Amanda in Minnesota says, I'm not sure if it's possible, but I was wondering if you could give a shout out to my husband, Brian. It's spelled different. So she said, it sounds like Brian, on your podcast.
27:19 Speaker 03 Hi, Brian.
27:20 Speaker 04 Hi, Brian. Shout out to you. Always worth an ask, right? While my husband will happily share his knowledge with anyone willing to listen, we don't talk about the specifics of our financial situation with others, in part because we know there are a lot of people who are struggling, including those who are close to us. And even if the opposite were true, he is an incredibly humble man who will avoid what comes across as gloat, whatever possible. But he has credit Do. And I thought acknowledgement of that would go a long way coming from you, the man he habitually listens to and needs advice from. He is so smart, works very hard and does everything he can to put our family and future generations in a position neither of us could have dreamt possible. Thanks to your financial wisdom guiding his fire to make smart financial moves,
28:04 Speaker 04 we are setting ourselves up to retire at 57. Thank you, Brian, and thank you, Clark, for caring about and helping others so passionately.
28:13 Speaker 03 All right.
28:13 Speaker 04 I love that.
28:14 Speaker 03 Such a kind message, Amanda. I just love that. Brian is my middle name, so I'm sure it became my middle name being named after your husband, Brian, right? Anyway, this is wonderful. And being able to make the choices you want to make is what financial independence is all about. For a while, like 10, 12, 15 years ago, the FIRE movement was all the rage. That was the hot thing. Financial independence, retire early. And it's not as much buzz about that now, but it's really not as much about being able to retire. At the whole FIRE movement was about being able to retire in your 40s, you're telling 57.
28:59 Speaker 03 It's about having the freedom to make the choices you want to, to work if you want, to not work if you don't want to. And that's a guiding principle of what we're all about is that you create breathing room in your life by living on less than what you make. And it's something that's easy to say, hard to do, but a lot of Americans are able to do that hard work of living on less than what they make and creating that financial independence. So I can tell you, it's so powerful when you don't owe people money
29:39 Speaker 03 and you're free to make the choices you want to make because you are living a debt-free, near debt-free existence and you have built up savings and investments over the years. It's not like a lottery ticket. Why do you think so many lottery winners end up bankrupt within years of winning a lottery pool? Because they didn't change their habits with money. Habits, good habits, bad habits, they have patterns to them. And as you establish a good pattern of habits with money,
30:18 Speaker 03 it changes things. With exercise, establishing good habits. Chris and I were talking before this podcast about how I have neglected upper body strength and have been suffering because of it. Because I've focused so much on walking and jogging and stuff. So I've created good cardio, but not good strength. Balance in life is part of it. I was unbalanced in how I was taking care of my body. And now I'm working to get that in place. With life, it's never all one thing,
30:56 Speaker 03 but it is patterns and is habits. And they are key to the financial side and you having that independence. For what purpose? It's not to count your money. It's to do the things you want to do, whether it's to spend time volunteering that you used to spend working, to be charitable to organizations, causes, or a religious institution that really matters to you. It's about creating options for your kids. Whatever it is, owing money is a drag. It's kind of like an anchor
31:37 Speaker 03 carried around in your life. Having debt pulls you down, creates anxiety. But changing your life slowly over time creates a whole big difference, just as you heard here from Brian, told by Amanda's story about how proud she is of Brian. So thank you very much for joining us today. Coming up in a couple of days, we're going to have our latest Clark Stinks edition. Hope you can tune in for that. And if you've got a question that you just don't know the answer to,
32:14 Speaker 03 know that we now for our 34th year have free one-on-one advice from our Team Clark Consumer Action Center. If you need answer to a question or can't solve a problem, you can check in with us. You want to see all the information you need, go to clark.com/cac. It's all part of what we do to empower you with knowledge so you can save more, spend less, and avoid getting ripped off. Have a great rest of your day.
32:52 Speaker 00 Your sausage McMuffin with egg didn't change, your receipt did. The sausage McMuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time.
33:04 Speaker 01 Price and participation may vary. Promotion pricing may be lower than meal pricing.
33:07 Speaker 02 They're running a cover two defense. But you're running to get game day deals on Uber Eats. Keep everyone at tonight's watch party fed with deals from your go-to restaurants. Or stock up with deals on your favorite snacks and groceries. Whatever the occasion, get game day deals on Uber Eats all season long. It's not football without food. Uber Eats. Order now. Terms apply. Product availability varies by region. See app for details.
Previous 03.03.2026 Ask An Advisor With Wes Moss Next 03.06.26 Clark Answers His Critics on Clark Stinks / Renovation Reprise Page updated November 6, 2026 · transcript and summary are machine-generated
