So one thing federal financial regulators and Congress need to examine is why banks can pay virtually nothing in interest rates on standard savings accounts while continuing to charge in the 5 percent range for 30 year mortgages and 6.5 percent and up or so on new auto loans, even as the federal funds rate is very nearly zero in real terms. It strikes me as a hidden corporate subsidy, in a way.
Financial advice gurus are always encouraging Americans to save more money, which is sound advice. It seems likely more folks will want a greater proportion of their money in FDIC insured accounts as opposed to the Ponzi stock market right now.
But people shouldn’t have to lock up several thousand dollars in a CD for two years just to get a meager 2% return. I mean, if a banks loans money at 5% and pays depositors 2%, the advantage is still with the bank, to be overly simplistic about it.
Sure, there are those who can buy CD’s and do so with tens of thousands of dollars, and good for them, but families who have smaller savings accounts are likely reticent to trade liquidity for a couple hundred dollars a year or less in interest. If we want a higher savings rate as a matter of national policy, people should be encouraged to save.
I think there used to be institutions in this country geared towards ordinary consumers known as “Savings and Loans,” but something happened to them about twenty years ago and they went away, curiously enough during the reign of Bush the Elder.
Not sure the best way to address this exactly, but banks should at least have to pay out more in interest than they charge in fees, over a certain minimum balance. Either that or we bring back savings and loans, and keep everyone named Bush away from them while regulating the hell out of them.
And yes, there are credit unions, which can be a good option as well.
If you shop around for a good bank, you should be able to find a good interest rate. There are quite a few high yield savings accounts online. I get nearly 3% with FNBO Direct right now without having the hassle of CD’s.
That’s an unregulated capitalism for you.
Why should I save, when saving doesn’t keep up with inflation?
I’m going to spend every extra dime I have on collectible spoons.
Do we have a right to tell banks how profitable they can be? Cause if you make them pay interest, that cuts into profits and hurts shareholders. That’s like kryptonite to conservatives.
On the other hand, we bail them out when they make bad decisions, but we don’t require they be less profitable in return for the bailout.
I remember the days when a passbook savings account always paid something like 5 and a quarter percent. That was the law. The saver always got something and the bank then lent that money at somewhere around 10 percent or a little less for the best customers. The competition in lending made sure usury didn’t get out of control. Borrowers had to really prove they could pay the money back.
Of course the whole system fell apart with runaway inflation in the 70’s.
Money should never be cheap. People won’t value it and then they’ll just piss it away.
Jon–
Seems like you lean toward wanting a “sure thing” return. It’s about Risk & Reward. A low risk taker, at this point in time, ain’t gonna get much.
This means you should look for other vehicles to invest your money…stocks, real estate, precious metals etc.
I would suggest you look into stocks with consistent, historic yields.
I took a lot of crap from the dumb bunny about Wells Fargo…but even today if you were to buy it @ 28, it has a dividend yield of over 4.5%.
When I bough some Boeing a month ago at 37, the yield was 4.55%
Also keep in mind most dividends are only taxable at the Long-Term Capital Gain Rate of 15%….vs. whatever your Marginal Tax Rate is on Interest.
For example, Wells Fargo @ 4.5% Dividend yields the same AFTER-TAX as a 5.9% CD.
Nice that you are shopping around Jon.
I was in CD’s @ 5.25% from around May, 2007 when I got all out of the market until they matured in November/December, 2008.
I have been averaging in to high dividend yields….as it doesn’t look like Obama is going to mess with Capital Gains Tax at this time.
C’mon Jon…take a little risk.
Or, if you have a home mortgage, what rate is it at??
Paying off debt can also be a good investment.
2. Blue John spews:
What happened to your pipedream of buying a $200,000 home in Seattle MicroDot Head??
ING Direct
BECU
There are a number of options for people who want a high (meaning, more than the 0.5% Wells Fargo offers) interest savings account.
Hell, BECU even offers 7.5% up to $500 for those working families or students that have meager savings.
Both of these institutions are also FDIC insured. The only people who can complain about only getting 0.5% are the IDIOTS who refuse to do basic research and put their money where it is most beneficial for them to do so.
30 year bond is currently paying 3.08%. Available at TreasuryDirect.gov in $100 denominations.
If we’re going to get another Trillion dollar deficit like Obama says we will, Bonds are going to be the best investment right now.
Goldy goes to his girlfriend’s parents’ house for Hannukah dinner.
This is to be his first time meeting the family and Goldy is very nervous.
They all sit down and begin eating a fine meal.
Goldy is beginning to feel a little discomfort, thanks to his
nervousness and the broccoli casserole. The gas pains are almost making his
eyes water. Left with no other choice, he decides to relieve himself a bit
and lets out a dainty fart.
It wasn’t loud, but everyone at the table heard the poof.
Before he even had a chance to be embarrassed, his girlfriend’s father
looked over at the dog that had been snoozing under the Goldy’s chair, and
said in a rather stern voice, ‘Skippy!’.
Goldy thought, ‘This is great!’ and a big smile came across his face.
A couple of minutes later, he was beginning to feel the pain again.
This time, he didn’t even hesitate. Goldy let a much louder and longer
rrrrrip.
The father again looked at the dog and yelled, ‘Skippy!’
Once again Goldy smiled and thought ‘Yes!’ A few minutes later Goldy
had to let another rip. This time he didn’t even think about it.
Goldy let a fart rip that rivaled a train whistle blowing.
Once again, the father looked at the dog with disgust and yelled, ‘Skippy,
get away from him, before he shits on you!’
That’s after I corner the market on collectible spoons.
I think you need to pull those “spoons” outta yer ass and grow up.
200k in Seattle will get the permit and the beauracracy. Add in a couple years of interest
payment while you get through storm water management (984 pages of rules and regs last
time I looked). Fuck liberals are so fucking stupid its beyond comprehension. Then you can
start construction.
mark–
Bravo!!
Blue John is so pathetic, he cannot connect the dots between costly Government Bureaucracy and his inability to afford a home over $200k.
Somehow this Kool-Aid Drinker thinks it’s all Bush’s fault that Seattle adds $200k of bureaucratic cost to the price of a new home…and cannot imagine why there are no $200k houses on the market.
Blue John===The Original MicroDot Head!
@13 and 14 As someone who has worked in design and construction for many years, let me just say that you’re a couple of delusional, goatfucking twits, if you catch my drift.
@13
…storm water management (984 pages of rules and regs last
time I looked)
And I bet you read every last page, trying to find loopholes. It’s because of people like you that they have to spell out everything.
And yes, there are credit unions, which can be a good option as well.
A very good option. Much better than the old S&L from my experience.
If you don’t like the interest rate your bank is providing take your money elsewhere.
The requirements for joining a credit union are so loose these days (much to the chagrin of banks) almost anyone can join. Free bank machines too even if you’re not a member at some (like BECU)
You can keep a trivial amount at your original bank so you can use the machines for free but not enough to help the bank meaningfully so it actually costs THEM money.
I told my old bank why I left them.
Go join BECU.
@18 I’ve been a member of a credit union for nearly twenty years. No regrets whatsoever. Banks are to credit unions what a slice is to a hook. You can talk to a slice but a hook just won’t listen.
Yeah, I’ve notice the bank pays me 1/2% on my savings and then lends my money to their credit card customers at 28%. And these guys can’t turn a profit and need taxpayer bailouts? This sounds like fucking COMMUNISM to me.
I’ve been a member of BECU for about 15 years now, and I’ve been happy. They never try to push you into a bad deal. And now any resident of Washington State can be a member.
One of the ways I protect myself when buying a car is to arrange the financing in advance through the credit union. The dealers are always trying to push me through to one of their “lendors”, often trying to slip in paperwork authorizing them to switch me to another lender if they think it would be better for me to do so. I always cross out those clauses, and write in big letters on my paperwork: VALID ONLY IF FINANCED THROUGH BECU”.
They hate that – they would prefer to push me into one of their lenders where they get a big kickback, even if it’s bad for me in the long run. When one dealer tried to slip the paperwork allowing him to choose another lender back into the paperwork at the end of the transaction, ostensibly to “correct a small error”, I walked out. It’s kind of fun watching a salesman and a sales manager come running after you, begging you to come back, it was “all a mistake”. But I don’t do business with crooks, and I never fall in love with a car enough to sacrifice that principle.
rhp–
Great idea.
Car Dealers make money on Sales Price, Trade-ins, financing and warranties.
Bottom-line.
I haven’t financed a vehicle in about 30 years…but when I trade one in, I first firm up the price of the new one.
Do it step by step.
Avoid the confusing comingling of all these transactions.
Seperate them.
40 years ago, just before the post-Vietnam, post-oil crisis inflation hit, savings and loan assn. interest rates were regulated, which kept most other banks somewhat in line. Right now credit unions seem to be the place to go, both to park your savings (those of you that have any; I don’t) or get a car loan. States also used to regulate credit card rates, til the industry lobbied their way out from under.
Don’t be foolish enough to believe that banks lend out the money you deposit with them. There isn’t nearly enough money deposited in interest bearing accounts to fuel the ravenous hunger for debt in this country when the economy is chugging along. The simple fact is that when a bank issues a loan they conjure up new money out of thin air.
Increase fractional reserve requirements and watch banks begin to compete for depositors.
But alas, be prepared for tightening money supply as well.
#12
Cynical, could you detect sarcasm if it bit you on the butt? Apparently not. You should change your name to Mr Cranky.
Blue John–
Get another job. Work 16 hours/day 6 days/week for 5 years like I chose to do.
Then buy the house.
You are soft and pampered.
You spend way too much time bitchin’ and way too little time doing something positive about your plight.
Grow up, wise up and WAKE UP.
Loser.
Chad @ #9: 4-week treasury bills are at 0%. Safest most liquid investment on the planet, and all the buyers want the safety over the interest.