Americu - .75%
Rome Savings - .55%
Adirondack - .75%
It's been a while since the rates on simple savings accounts were over 1%. But I know there was a time, way back in my distant childhood memories, where a savings account was actually a viable tool for growing money.
Is it the area we live in? I find myself wondering if people living 100 miles to our west or south face these same dismal rates and choices which basically are no choice when it comes to a simple investment vehicle.
If I want to grow my money, it's CD's, bonds or stocks, all of which will tie up my money for a set amount of time. What about the families that are living paycheck-to-paycheck who want to try to save a little on the side?
With basic inflation at 3% the above rates are little improvement over keeping my money stuffed in a mattress.
AmeriCU is running radio commercials every 15 minutes about their latest "sign up a friend, earn $50!" promotion. It seems to go against the spirit of a Credit Union to spend so much money advertising. Whatever happened to paying back the shareholders? Why are instead of the banks competing against each other with better savings rates, we see the rates continually decreasing?
As a comparison, ING Direct (a long-standing bank moved online) is offering a 4.1% savings rate. No minimum balance. No fees. I've seen their savings rates as high as 5.5% over the last few years. They're able to offer such high rates because of low overhead. So I can earn more interest investing $20 with ING than I would investing $100 with one of the local banks.
I know that the area banks won't ever be able to compete with an automated internet bank, and I would much rather do business locally than with a faceless corporation, but I can't help but feel rates are intentionally being kept low in our area. And its created a vicious cycle of people who are poor and stay poor through no easy investment options available to them. Meanwhile the banks are making plenty of money from car loans and mortgages.
I hope the local banks are feeling the heat from internet banks like ING and others. I know I'm very close myself to moving all my banking online and being done with the local banks.
1 comments:
Savings rates are low because lending rates are low. The difference between the two is one of the ways banks make money. So if money is lent out for a car payment or mortgage at 5%, lets say, then what banks pay us to borrow our money from us is going to be even lower.
Watch out for banks paying noticably higher interest rates on your savings compared to others. Many banks right now are balancing on the brink of insolvency and are desperate to lure in more cash to get their reserve levels back up where they should be. Although in a failure, another bank would probably buy them out w/o any change to you, or FDIC would cover any savings up to a certain amount, why tie up your cash w/a sick bank now?
Bankrate.com offers ratings that can help you sort out sick from healthy institutions. I also read the business websites to keep up to date.
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