With the Federal Reserve lowering interest rates at the end of 2008, 2009 will be a tough year on people looking to save money. When the Federal Reserve Bank lowers interest rates, it is great for people looking to borrow money. However, these lower rates also translate into lower interest rates for savings account, checking accounts and certificates of deposits.
These lower interest rates are going to make it very difficult for people looking to earn the most interest on their savings. Recently, online banks with high yield savings accounts like ING Direct and Emigrant Direct Bank have already lowered their interest rates. Banks and credit unions around the country have been lower their savings account rates as they can borrow money from the Federal Reserve or other banks for lower interest than they had to pay earlier in 2008.
Lower interest rates are not limited to savings accounts. We are seeing banks lowering their CD rates too.
These lower bank rates are going to make it very difficult for savers to earn money on their savings in 2009. In order for you to earn the most money you can on your savings.
These lower bank interest rates come at a bad time for individuals. Many people are moving money out of the stock market into bank accounts due to the market volatility. Additionally, as unemployment rises and more and more people are being layed off work, people need to save emergency funds more than ever. Typically, people save their emergency funds in high yield savings accounts and certificates of deposits.
You will have to do your research in 2009 to find the best bank interest rates for your savings.
By: Fred Peters
Posts Tagged Checking Accounts
Saving Money in 2009
Nov 27
Saving For Hard Times
Nov 11
Saving for rough times is a crucial part of your financial planning as having some spare cash stashed in an easily accessible place to cover disasters is a good idea. At a certain point common sense dictates that you’re going to run into an unforeseen expense and not having funds to pay for it you’re going to have to use poor borrowing practices. The average surprise cost when such events do occur is thought to run a few thousand dollars however whether it’s a gigantic amount or a very minor amount a disaster fund is needed to cover it.
You don’t need to hide this money under the mattress for it to be available. The best way to conserve this fund is by using a quick access savings account that pays a good rate of interest and hopefully is tax exempt. You could set up a simple bank transfer and allot a small amount into your bank account each pay check. You should also be sure that your savings account is low risk as you wouldn’t want to lose the money by trying for high interest payments. For example: don’t invest the money in the stock market, as stocks and shares can change in value, depriving you of much needed money at a critical moment.
Treat any interest your disaster account earns as a perk and not the main reason for having the account. In a pinch you’ll need quick easy access to your money and this is more useful than a little more money in interest can ever bet. Do not allow your disaster fund to grow into a fortune as the extra money would be more wisely invested, growing more in a better investment vehicle. Keep just enough to cover a rainy day so a few thousand should be more than enough.
Don’t be tempted to use your existing account to create up your rainy day fund. Your existing account makes it easy to “borrow” from the savings without knowing it and this usually means you won’t have enough money when you really need it. Also most checking accounts don’t pay high interest rates. To avoid the accidental spending of your disaster fund keep your checking account for normal bills and expenses.
By: Joe Duggins