Savings Account Interest Dropping

[polarmystery]

Hey All,

I have a savings account just for emergency expenditures, and I've noticed over the past year or two that the interest keeps going down. I know the interest on them isn't that high at all, nor should they be, but I'm just curious if anyone knows why this is. I'm not trying to make money from my savings, I'm just curious as to why it is happening.

I have it through American Express personal savings and the account interest went from 2% -> 0.75% in the past two years.


?? :|

 

[PricklyPete]

http://www.federalreserve.gov/

 

[Lyfer]

That's why I have all my money underneath my bed.

 

[Dacalo]

Financial institution's business model is to have deposits from customers and use that to lend money. Right now, capital is cheap and readily available, since the federal reserve rate is so low, where banks can borrow money from. Since funds are readily available, customer's deposits are no longer in demand, and thus, they can lower the rates on these and keep interest expense lower than usual. Overall economy sucks now too and that contributes.

 

[FoBoT]

they don't need your money. in fact, for a while, large banks were charging very large customers to keep their money, i.e. a negative interest rate , because it was costing them to take their money, they had no one to lend it to

 

[Matthiasa]

Well better then what mine are sitting at.
Maybe .00001% if I'm lucky.

 

[child of wonder]

When I first opened an online savings account in early 2007 it had a 5.65% introductory rate that went to 4.65% after that.

Now that same account has a 0.60% interest rate.

I think I'm going to take my emergency savings and invest it in something relatively safe. Maybe I can squeeze 2% or even 3% out of it instead.

 

[Mr. Pedantic]

People, people.



3.15%.

 

[overst33r]

People, people.



3.15%.

Savings. Not jump-thru-hoops-rewards checking.

 

[ViviTheMage]

Mine did the same ... also went through a friggin bank change.

ETrade savings was like 5-6%, and over the passed few years, switched to discover savings, and then has been down to about .95% now, kind of a joke. Might as well put it in checking.

 

[lozina]

I remember when I was little the savings interest rate being close to 9%

 

[highland145]

I remember when I was little the savings interest rate being close to 9%

Yeah and mortgages were 14%+

 

[polarmystery]

I remember when I was little the savings interest rate being close to 9%

Yeah I had a couple of friends do the creditcard-savingsaccount-savapalloza where they'd get credit cards that had a 0% intro rate, take out as much cash advance as they could and dump it into the high interest savings accounts. They'd take a beating on their credit scores, but when the 0% ran out, they'd end up with a few grand worth of extra money.

Not sure if it was worth it to them or not.

 

[polarmystery]

Mine did the same ... also went through a friggin bank change.

ETrade savings was like 5-6%, and over the passed few years, switched to discover savings, and then has been down to about .95% now, kind of a joke. Might as well put it in checking.

I was thinking of doing this as well. Getting $0.80 every month is hardly worth it.

 

[Wyndru]

My online savings keeps going down because it is based on money market funds performance somehow. At least that's what the bank teller told me. I used to get 6%, now it's less than .5%...

 

[ViviTheMage]

what checking accounts can you earn interest on?

 

[gevorg]

If you're doing it for long term:
http://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

Won't keep up with real inflation, but better than near 0% rate.

 

[Svnla]

OP, that is why you need to put your emergency fund into a reward checking account. My accounts are earning between 2 to 3% per year. Not much but better than normal saving accounts.

 

[lothar]

Savings. Not jump-thru-hoops-rewards checking.

https://addons.mozilla.org/en-US/firefox/addon/imacros-for-firefox/
Completely automated, no jumping through hoops required.
Been doing it for years now with my Verizon bill on my 2 Reward checking accounts and I have yet to miss a single beat.

 

[Lithium381]

I WAS GEtting 4%, now i'm getting .3% i think . . . i could put it into another institution but i doubt i'd get much better. or a long term bond can pay 3% but then i have less liquidity

 

[crownjules]

what checking accounts can you earn interest on?

Lots of places offer them. But you usually have to maintain a large amount in the account or else get charged a fee that wipes out any interest you earn and then some.

 

[Mr. Pedantic]

Savings. Not jump-thru-hoops-rewards checking.

That is my savings.

https://www.asb.co.nz/personal/accounts/savings-accounts/fastSaver

Suck on that.

 

[Colt45]

Fed rate is so low. I hope it goes up sometime soon... Being so low spurs inflation.

 

[zinfamous]

went from 6% to 0.6%


:\

 

[polarmystery]

Yikes. I didn't know the lower rates were so prolific.