Have You Checked Yours Lately?

Hi Everyone,

As the title of today's blog asks, have you checked yours lately? I am talking about the interest rates on your savings or CD accounts. It is hard to swallow when banks offer "high value" interest rates of around one half of one percent or 0.50%. Where is the high value? Higher then zero percent? The prime interest rate is stuck at the historical low rate of 3.25%. But, are you aware that the prime rate has been at 3.25% since 12/16/2008? Can you remember how much the interest rates were in your accounts during the years 2008,09,10,11 and 2012? Don't remember? That's ok, because I am pretty sure that what you do remember is that your savings and CD interest rates that you received have dropped substantially since 2008. I just read an ad for a bank that is offering 1.20% for a 3 year CD. If memory serves me correctly, back in 2008 you could get a 1 year CD with a 5.00% interest rate. What has happened?

Back in the day, bank savings and CD rates raised or lowered interest rates when the prime rate went up or down. That made sense. But wait, the prime rate hasn't changed in more then 3 1/2 years. If the prime rate hasn't been lowered since 2008, why have the rates gone down hill? According to what I have read on the subject, it seems that even though the big bank bailout times 2, stopped the bleeding it didn't stop the banks from hoarding the TARP money and not loaning it out. So what is the reason? Oh yea........their hunger for more money. Now some people say that federal regulations is the cause, but the important regulations like the Volker rule has not been passed. The credit card regulations should have nothing to do with interest rates on savings. I truly believe that banks have learned very well from the airline industry. Flying now is like an a la carte experience. They charge extra for anything and everything they can i.e.: pillows, blankets, carry on luggage, weight of checked baggage and where you sit, etc., etc. So now banks are charging excessive fees and lowering savings rates for the sole purpose on making more and more money.

I have a great common sense idea. Since banks need lots of money to invest, why not entice existing and new customers to deposit their hard earned money with the bank by offering higher than normal interest rates? Say 1.50% or even higher. The bank(s) would receive a new influx of money that would most likely beat their current amounts. Even though they would pay a higher interest rate, they would more than make up for it with their new investments. Unfortunately, bankers haved proved time and time again, that they don't have a lot of common sense. Just wait, someday soon, one bank will realize this and do it.

Til next week.

Peter