I know this might seem naive, but can someone explain to me the 50 cents that gets added onto my savings account every so often? How do they come up with that value? I understand its interest but the rate is like 0.25%.

And how come online banks like ING have a rate of 2.20% instead of my 0.25%? Is that something I should be considering?

2/6/2009 10:33:37 AM

Nothing to help you but I miss having 5.05% with HSBC. It seems like every 3 months they knock the rate down a bit.

2.45%

2/6/2009 10:39:14 AM

I started with HSBC when it was 5.25% and now its down to a little over 2%

But I do have a checking account with them as well with almost just a good of a rate.

2/6/2009 10:51:51 AM

yes you should have a savings account with an ING or someone similar. local banks give you jack shit for your money. to answer your other question, your money is compounded monthly based on that rate.

however, as noted, that rate is based on the federal rate so it will go up and down. in the past few months the feds have cut the shit out of it so you the the savings percentages are a little down.

2/6/2009 11:31:46 AM

online banks are able to give better rates because they have lower overhead

2/6/2009 11:35:28 AM

3.20%

http://www.dollarsavingsdirect.com

2/6/2009 11:48:08 AM

I also have a question

Does anyone know how the interest rate that the Federal Reserve sets affects the interest rate I see in my savings account?

2/6/2009 11:52:25 AM

are these really serious questions from the OP? i thought this kind of stuff was covered in basic math classes - google will help you though

same for terd - it's worthwhile to read up and know these kind of general knowledge questions

2/6/2009 11:59:42 AM

if its so general knowledge then why cant you answer douche

I know that the Fed rate is the rate at which the Fed loans money to the bank I deal with

I was under the assumption that my bank then sets the interest rate in my savings account at whatever they want (usually a rate competitive with other similar banks)

However it would be naive that the rate the Fed gives to the bank doesnt have some bearing on the rate I see in my savings account.



My real question is as the FED artificially keeps the interest rate at nearly 0% I can only assume that my savings interest rate is also artificially lower than it should be. It begs the question, "why arent Americans able to save?"

Could it be because the FED is constantly lowering the rate?, Im not sure because I dont know how the FED rate and my savings rate are interrelated.


I would like to see the FED stop tampering with the interest rate and let the Free market decide the interest rate.
Who knows we could see a standard savings interest rate jump to 8% or something like that. I would be more than happy to begin saving a hell of a lot more money if I could actually see it growing in my account instead of $0.30 I see in interest now.


With an 8% interest rate you could save for a few years and buy a used car with cash instead of having to buy everything on credit. It would trully change the dynamic of our economy and in my opinion tip it in favor of consumers instead of banks and corporations



I may be totally off base on all of this though, so please Omar, impart your general knowledge, it will be appreciated

2/6/2009 12:18:54 PM

http://www.frbsf.org/publications/federalreserve/monetary/affect.html

2/6/2009 12:26:52 PM

^good link and it helped some but it still didnt address a savings account interest rate only the real interest rates on loans

2/6/2009 12:39:27 PM

http://www.coastal24.com/personal/checking/go-green-checking.html

just went down from 5.01% to 4.05%, but still a win vs. online banks.

2/6/2009 12:47:24 PM

Quote :

"My real question is as the FED artificially keeps the interest rate at nearly 0% I can only assume that my savings interest rate is also artificially lower than it should be. It begs the question, "why arent Americans able to save?" Could it be because the FED is constantly lowering the rate?, Im not sure because I dont know how the FED rate and my savings rate are interrelated. I would like to see the FED stop tampering with the interest rate and let the Free market decide the interest rate."

you really have no idea what the Fed does, do you......
It's pretty obvious you don't, so in the meantime, you should probably keep your mouth shut about what you think the Fed should or shouldn't be doing

2/6/2009 2:15:52 PM

Im not trying to act like I know it all, If I was I wouldnt have began the conversation with a question

Again someone comes into the thread and tells me Im dumb and should know these simple matters but is unable to offer an explanation as to what is really occurring

I have found this however

http://www.ehow.com/how-does_4564344_savings-interest-rates-work.html

Quote :

"Savings interest rates are pegged to the prime interest rate designated by the Federal Reserve Bank. When it is expensive to borrow money, savings interest rates are high so that financial institutions can raise funds to make loans. When the Federal Reserve Bank sets the prime interest rate low, savings interest rates are also low. "

Ahh just found this

Quote :

"Since the middle of 2007, the Fed has cut the federal funds rate by 5 percentage points. Over that time, average interest rates on savings accounts have dropped steadily, from roughly 4.5% to the current average of just 0.38%. "

http://www.bankingmyway.com/article/federal-reserve-rate-cut-and-your-savings-account

[Edited on February 6, 2009 at 3:09 PM. Reason : link]

2/6/2009 3:03:23 PM

For those Wachoiva customers out there, this Way2Save is a sweet deal...

http://www.wachovia.com/misc2/0,,1774,00.html

5% APY and a 5% first year bonus.

I've had it for about 6 months now and have over $1000 in $100 (monthly) transfers, check card transfers (for every check card purchase they transfer $1 into the account), and interest

2/6/2009 5:21:05 PM

^
I just about creamed my pants reading that...then I thought "If it sounds too good to be true..."

apparently
1. You can only deposit $100/month
2. They don't give you $1 every time you use the card...they merely transfer a dollar from your required Wachovia checking account into this account whenever you use the card.

Not a bad deal by any means, but sort of small potatoes.

2/6/2009 7:58:52 PM

Coastal Federal Credit Union has a 5.01% APY on their Go Green checking for balances up $25,000 or something like that. Just signed up last week.

2/6/2009 8:05:44 PM