Why the Best Deposit Rates Are Decreasing

[TroyP]

A little light reading from the folks over at the Bucks blog at the NY Times:

 

http://bucks.blogs.nytimes.com/2010/01/12/...?ref=your-money

 

I'm partial to HSBC Direct personally... but I already bank at HSBC, so its particularly convenient for me.

[nothingtolose]

Interesting article.

 

I used to bank with HSBC, but when their APYs dropped a couple of years ago, I moved around before finally settling on Alliant CU.

[hegemony]

hsbc is too low for me. I went with DSD but now feel the need to open accounts with alliant.

[Kevin20]

Funny dynamics there. Banks offer higher interest to draw in desperately needed Tier-1 capital in order to avoid failing; meanwhile the Feds are discouraging them from doing the thing they think they need to do to avoid insolvency.

[DharmaDog]

Yet another blow to those trying to save.

 

We're constantly told that one of the reasons for this economic mess was that people did not save enough and spent beyond their means. Now that more people are saving more money, heading the warning and learning from past mistakes the banks and government are doing everything they can to discourage saving.

 

Interest on deposits continues to fall, while the banks jack up the rates on consumer debt and conjure up new fees to hit us with on nearly a daily basis.

 

It seems like paying off debt should have priority over saving if rates keep dropping. Of course that could jeopardize your ability to weather a further drop in the economy.

 

Seems like the deck is really stacked against us - more so than usual, anyway.

[nothingtolose]

Many banks are awash in deposits but short on prime credit risks.

More people saving --> lower APYs are needed to attract new deposits.

Inflation has to be considered too (real APYs).

[Kevin20]

Yet another blow to those trying to save.

 

We're constantly told that one of the reasons for this economic mess was that people did not save enough and spent beyond their means. Now that more people are saving more money, heading the warning and learning from past mistakes the banks and government are doing everything they can to discourage saving.

 

Interest on deposits continues to fall, while the banks jack up the rates on consumer debt and conjure up new fees to hit us with on nearly a daily basis.

 

It seems like paying off debt should have priority over saving if rates keep dropping. Of course that could jeopardize your ability to weather a further drop in the economy.

 

Seems like the deck is really stacked against us - more so than usual, anyway.

 

 

It's not exactly a conspiracy against savers. You can't expect banks to offer depositors a lot when the banks themselves can get barely more than zero percent on much of their capital. The Fed Funds rate is 0.11% and short term treasuries are less than 0.5%.

 

It's a very low interest rate environment. Well except for people like me who have had credit card problems in the past, but I don't think credit cards are the bulk of most banks' businesses.

[DharmaDog]

Yet another blow to those trying to save.

 

We're constantly told that one of the reasons for this economic mess was that people did not save enough and spent beyond their means. Now that more people are saving more money, heading the warning and learning from past mistakes the banks and government are doing everything they can to discourage saving.

 

Interest on deposits continues to fall, while the banks jack up the rates on consumer debt and conjure up new fees to hit us with on nearly a daily basis.

 

It seems like paying off debt should have priority over saving if rates keep dropping. Of course that could jeopardize your ability to weather a further drop in the economy.

 

Seems like the deck is really stacked against us - more so than usual, anyway.

 

 

It's not exactly a conspiracy against savers. You can't expect banks to offer depositors a lot when the banks themselves can get barely more than zero percent on much of their capital. The Fed Funds rate is 0.11% and short term treasuries are less than 0.5%.

 

It's a very low interest rate environment. Well except for people like me who have had credit card problems in the past, but I don't think credit cards are the bulk of most banks' businesses.

 

I do understand that, but they are having it both ways - providing low interest (understandably) on deposits, while rate jacking consumers on their credit cards. And this FDIC policy will just drive rates on deposits lower.

 

I don't agree that it is a low interest environment when it comes to credit cards. My scores have done nothing but go up over the last several years. I'm sitting at 770+ (FICO), I haven't taken out car or home loans in the last two years, I haven't been late (have 0 lates on the reports), I haven't asked for credit increases, I think I did open one new card 1.5+ years ago, I have low utilization (around 8%), but I'm frequently getting notices from my credit card issuers that my rates are going up. I think a couple are around 25%. I might have one that is still around 12%, but I'm sure that will change.

[AnonymouslyIndebted]

Interesting article, but not very good for people who are trying to save.

[GEORGE]

PRIME AT RECORD LOWS

 

They don't pay savings rates at PRIME

[GEORGE]

A FEW DECADES AGO...THE FIRST $200 OF SAVINGS INTEREST WAS TAX FREE

 

COINCIDENCE...I think not

[GEORGE]

Some people pay that mortgage payment for 30 years when they could pay it off 10 or 15 years early

 

BUT THEY NEED THAT TAX DEDUCTION

 

"IF" you could get $200 interest tax free...you may save more

 

Why not $1,000 tax free???

 

Why does savings account/checking account interest even have to be taxable???

[TroyP]

Some people pay that mortgage payment for 30 years when they could pay it off 10 or 15 years early

 

BUT THEY NEED THAT TAX DEDUCTION

 

"IF" you could get $200 interest tax free...you may save more

 

Why not $1,000 tax free???

 

Why does savings account/checking account interest even have to be taxable???

 

Why does income have to be taxable?

 

The Federal Government has a (poorly managed, constantly in the red) budget, and a bunch of guys who think they're very bright because they convinced a number of not so bright people to elect them, decided it was so.

[breeze]

not here, please. http://www.politicsfirst.com