The Fed pays 1.50% interest on reserves; so why are interest rates so low? Since 14th Dec 2017, the Federal Reserve Bank has paid 1.50% interest on excess reserves.  

So why do depositors' interest rates still remain so low? According to BankRate, across the US, the national average savings account interest rate is 0.09% and only a handful of banks offer 1.50% or more.

The Econ 101 story would go something like this:


  If Bank A offers 1% and Bank B offers 1.3%, then consumers will move all their savings to Bank B. Bank A will then compete by raising its rate to 1.31%, which is still profitable since it can deposit its money at the Fed for 1.50%. Bank B will then raise to 1.32%, etc. Competition will ensure that the interest rate is driven up towards 1.50%.


I imagine there are some transaction and administrative costs, but I don't see how these could explain the huge gap between the national average savings interest rate (0.09%) and the interest rate paid by the Fed to banks (1.50%). I do believe also that there is no limit to the reserves that banks can place with the Fed (though please correct me if I'm mistaken on this point).

What am I missing here? Or: Why does this market deviate markedly from the perfectly competitive ideal?

Some possible general explanations off the top of my head (but I suspect there may be other more specific institutional factors that I'm not aware of):


Consumer ignorance. (Similar to this recent working paper which documents that people fail to pay off those credit card debts that charge the highest interest, and instead adopt some sub-optimal "balance-matching" heuristic.)
Consumers face transaction/psychic costs moving their money about, setting up new accounts. 
Banks offer other services, so consumers may still prefer to save with a bank despite its lower interest rate.
Menu costs - it's somehow costly or maybe bad publicity to frequently change the bank's savings rate.
There are several issues here:


There are banks offering close to $1.5\%$, some well-known such as Goldman Sachs and American Express 
Most banks currently have excess reserves deposited in the Federal Reserve System which they could use for lending if they wanted to, so they are not missing profitable commercial lending opportunities due to lack of deposits
Many customers are leaving their money in very low interest accounts, possibly through inertia or the attraction of other banking services, and so banks have less incentive to push up interest rates.  If customers want more, they can go for longer-term certificates of deposit yielding over $2\%$
In eras of "normal interest rates", banks took a margin.  For example the old anecdotal 3-6-3 rule for bankers (pay $3\%$ percent interest on deposits, lend money out at $6\%$, and tee off at the golf course at $3$ p.m.) might have been associated with a base prime rate of around $4-5\%$ percent and a default rate of around $1-2\%$.  So with a base rate of $1.5\%$, short-term savings rates should not be expected to be close to this.  Earlier in the cycle when Fed interest on excess reserves rates were $0.25\%$, this margin was not compatible with positive savings rates; only now are banks able to restore their margins