Counting My Pennies » interest rates

Rates rising?

Megan — Mon, 15 Mar 2010 12:40:27 +0000

Over the weekend, I read an article that discussed the possibility that the Fed might raise rates soon. (What does soon mean in this case? I don’t know.) The article was written with a sort of “Oh no, this is terrible!” sort of vibe, but as a saver, I was pleased to see this happening. Rising interest rates are always good for my savings account.

Now, I’m not entirely selfish here. There’s another big positive to rates rising. If the Fed is comfortable bringing rates up again, that means that they believe that the economy is finally moving in the right direction. That’s something I think we can all handle. It’s nice to not see all sorts of doom and gloom going on. Plus I like the idea that maybe my retirement accounts will finally start to show some real growth instead of loss.

Of course, I don’t want rates to skyrocket. That would be amazing for my savings account, but not so amazing for the day when I want to try to get a mortgage. But maybe we could have a nice balance.

Falling interest rates

Megan — Mon, 22 Feb 2010 11:00:50 +0000

Last week managed to get away from me. Work got kind of crazy when people finally caught up after all the snow. While it was kind of fun to have a few snow days, we’re definitely paying for it now. I’m hoping this week isn’t quite as bad.

Over the past few weeks, I’ve gotten a number of e-mails from the various online banks I use for my savings accounts. Once again, they have all dropped their interest rates. I’ve become fairly numb to it at this point. It used to really bug me when I found out rates were dropping again, but now it’s pretty much expected. Rates on my ING Direct savings account have dropped three times this year alone! On some level, it’s just nice to be making any interest on my money, though I do miss the days of the 5% interest rates.

I think what bugs me the most is the low rates on CDs. I just had another CD from my CD ladder mature and I didn’t even bother to lock it into another CD. I realize locking in a low rate is better than locking in no rate at all, but it’s just a little frustrating.

Does that mean I’m less likely to save? Heck no! If nothing else, it means I need to try harder to save since I won’t be earning as much interest. And someday, those rates may go back up again. Maybe not this year or next year, but eventually.

So don’t let it get you down, savers! Keep saving!

Savers continue to struggle

Megan — Wed, 21 Oct 2009 10:00:13 +0000

Yesterday, there was an article in the Washington Post containing information that will come as no surprise to many of you. The current efforts to keep interest rates low in order to try and prop up the economy is hurting savers. While lower rates are great when you’re buying a house, they’re not so great while you’re saving to buy a house.

When I opened my ING Direct Savings Account in the summer of 2007, the interest rate was (I believe) 4.5%. It started dropping in September, and just kept going. Now it’s at 1.3%. That’s a significant difference. Of course, it’s still better than the rates at my local brick and mortar banks, so I’m not complaining too much. (And yes, I know that other online banks may have marginally better rates, but I really like ING Direct so I’ve decided to not rate chase for savings. CD’s yes, savings accounts no.)

Not long ago, we were seeing year long CD rates over 5%. Now we’re lucky to find 2.5%.

It’s tough for savers. But complaining’s not going to do anything, so we just have to sit back, continue to save, remember that even if we aren’t earning any interest at all, we’re still saving. That’s what matters.

The article I linked is a bit angry, in a way, blaming Wall Street greed for the plight of the saver. I have mixed feelings on the issue. While I know that cutting rates benefits a lot of people, not just the stereotypical Wall Street fat cats, it does grate a bit to know that there are people making insane bonuses after making bad decisions while others who did nothing wrong are struggling to make ends meet. But there are many sides to every story, so I have just decided to worry about myself and continue to save (and, of course, donate to charities that help those less fortunate than me). And hope that things improve soon. I’ve noticed an increase in CD rates over the past few months, so hopefully that’s a good sign.

Rate Chasing

Megan — Wed, 10 Jun 2009 13:00:44 +0000

If you read PF blogs, you have probably heard talk as of late about the newly rebranded Ally Bank (formerly GMAC). The reviews seem positive, but what really grabs attention are their rates. I believe they’ve got the highest interest rates around right now, and I’m finding it very tempting to open up an account and see what it’s all about.

I’m trying to control those urges, however. I always said that I wouldn’t chase rates. I started out with an account at ING Direct, and while it remains my main banking institution, I have also opened accounts at HSBC Direct and FNBO Direct. I opened the HSBC account to try it out, and decided to check out FNBO when I was hunting down good CD rates. I’m probably going to move more of my long term savings over to one of those two banks, but I haven’t decided which one yet.

As I update my monthly net worth, I sometimes find myself wondering if perhaps I have too many accounts. I have accounts at those three banks (and numerous sub-accounts at ING, though I very much like that feature) as well as one at a local brick and mortar bank. For the most part, there aren’t any transactions on the other accounts, just continually growing savings, but I don’t want to spread myself too thin. Unless I was socking away some huge amounts of cash, I don’t know that it would be worth it to constantly move money just to get that extra .25%. Sometimes, simplicity is the best way to go.

That said, I’ve got an ING CD due next month, and I will defintely be scoping out rates and potentially moving money to another account, but not opening a new account. I think three online accounts is more than enough.

Do you rate chase?

Some Useful Saving Info

Megan — Fri, 01 May 2009 10:00:20 +0000

I just had a CD mature, so I’ve been scoping out rates at banks I know and trust. I put together a table and as I was looking at it, I thought, “Hey, the blog readers might like this as well.” So here you go.

	ING Direct	HSBC Direct	FNBO Direct
6 month	1.25%	1.75%	1.25%
9 month	1.50%	2.05%	1.25%
12 month	1.50%	2.30%	1.50%
18 month	1.50%	2.35%	1.75%
24 month	1.50%	2.05%	2.25%

There are other banks out there that may have better rates – these are just banks where I have accounts and therefore, feel a bit more comfortable opening a CD there. Sadly, my old standby, ING Direct isn’t doing so well in this area, so I might be checking out CDs elsewhere. Right now, I’m eyeing the 2.3% at HSBC Direct.

Looks like I made the right choice

Megan — Fri, 10 Oct 2008 10:00:10 +0000

As many of you have already noticed, yesterday, ING Direct dropped its interest rates in response to the Fed’s drop of the interest rate. I’m glad I got that CD started before the rates dropped! Savings accounts dropped from 3.0% to 2.75% (oh how I miss the days of 5%+ interest), and CDs are also down about a quarter percent. Still, 4% for a 12 month CD isn’t terrible. It’s not great, but it’s better than a lot of options.

Flexo has been discussing FNBO Direct quite a bit lately. FNBO is the online section of the First National Bank of Omaha, and given this latest rate drop, I have been looking at them a bit more closely.

I’m always wary of opening another account – I currently have accounts at HSBC Direct and ING Direct, though HSBC only has my Dollar a Day plan, as I have been much happier with the features of ING Direct. I just don’t want to be spreading out my savings too much. But I’m thinking of pulling my money out of HSBC Direct at the end of the year, so it might be time to check out a different high yield account.

As of yesterday, FNBO Direct was still at 3.5%. And of course, they’re fully FDIC insured, so there’s not any real risk, other than the hassle of having money at yet another institution. I may consider an account there over the next few months. While my current 2.75% rate is great, 3.5% would be that much better.

Do you find yourself switching banks to find the best rates possible?

Facing the Storm

Megan — Tue, 18 Mar 2008 23:46:00 +0000

So as I’m sure everyone has heard or read, the Federal Reserve Board again cut rates in an attempt to stop the current economic downslide. From what I’ve read, it sounds like a number of analysts believe that we are officially in a recession.

I haven’t decided if this means I will be making drastic changes. Of course, I have already noticed the increased price in groceries, so it might mean adjusting my grocery budget or simply working to buy less food.

I’m a little concerned about what’s going to happen to my rent come September when my lease is up. I should really consider picking up a roommate, even if it’s just an intern who comes for the summer.

I’m going to continue to funnel money into my ING Direct accounts. The interest rates aren’t excellent, but they’re better than I’m getting at Bank of America, and I like their security and their customer service.

I’m going to work on slowly funding all of my budget categories. Even if I can only drop in $5 a month, that’s better than nothing.

After the slight success I’m seeing from cleaning out my closets and listing items on eBay, I’m going to continue that plan. It’s kind of a dual benefit situation – I clean out my closets and declutter my life a bit, and I get a bit of cash in return. I’m selling things that I’m not using and therefore are worthless to me. Because of that, I’m delighted to get a few dollars back for it. Sure, it might be “worth” more than what I end up selling it for, but as many people have said, an item is only worth what someone is willing to pay for it.

I have a family vacation planned for the summer, but my only expense there is transportation and incidentals once we arrive (I may try to convince my parents to let me buy them dinner one night, though) and immediately following that is a friend’s wedding. Other than that, I don’t have any travel planned until Christmas, so no expenses to be cut there. I do have a few items of clothing that I really do need to replace, but I know exactly what I want/need (size, color, brand), so I will just watch for sales and find them when I find them. I may also decide to do more shopping online. Yes, I pay for shipping that way, but I save on gas, and more importantly, I save on impulse purchases.

I will continue to contribute to my TSP each paycheck (I become eligible for the match in June, which will be a nice bump to that account), and I plan to start funding my Roth IRA for 2008 in the coming months. I have a Roth with Vanguard, and I want to buy a new fund, which requires a minimum $3000 initial purchase, so I’m waiting a bit until I’m actually ready to put that chunk of money into an investment.

Other than that, I just plan to ride this thing out. I’m not in a position to buy a house, and the falling interest rate does hinder my plans to save for a down payment, but not by all that much. Only a few hundred dollars a year, really, and while that would be nice to have, it’s not the end of the world that I have to save a little bit longer.

To summarize, I would say that my plans for this recession are to simply dig in my heels and hold on and maybe try to make a little progress in the face of the storm.

Breaking News!

Megan — Tue, 18 Mar 2008 18:42:00 +0000

The Fed has cut rates again. Interest rates were cut by 3/4ths a point. I get that this is supposed to help the economy, but on a personal note, what is this going to do to my high yield savings accounts?

Off to look into putting more money into a CD.

Interest rates dropping again?

Megan — Thu, 14 Feb 2008 18:15:00 +0000

Today, Ben Bernanke “signaled a readiness to keep on lowering a key interest rate to shore things up.” Today’s announcement caused stocks to drop in response as well.I’m not sure what I think at this point.

From a personal standpoint, it just means that the interest rates on my savings accounts will drop yet again, and I’m considering dumping some funds into a cd with a decent rate while I still can. I have to admit, I find it a little bit frustrating. But I’d like to think that the people making these decisions are smart and know what they’re doing.

Edited to add:
I decided to open another $500 CD with ING Direct at the 3.65% interest rate. Only the 6 month CD is available at this rate. I did this just about a month ago when the rates were over 4%. I’m reluctant to lock up too much of my money for too long (I do have other CDs with a different bank), but I do know that I’m not planning to need this money for another 6 months, so right now, it’s what makes the most sense. Sure, it’s only $500, so we’re only talking a few dollars in interest, but those few dollars add up!