Savings interest rate going down...again

[MaryKay]

I'm sure everyone that has a savings in an online bank is in the same boat these days, but it's disheartening that the interest rate keeps going down. I thought when it dropped from near 2% to 1.75 and then another drop to 1.60 then to 1.50 then to 1.25%, it was making me nervous, but today I got a notification that it had dropped to 1.10%, effective tomorrow (6/12). Nothing much to be done, is there?

[disneysteve]

As long as the Fed keeps rates at or near zero, savings accounts will pay very little. Still, you're 10 times better off with an online account like Ally or Capital One than you are with most banks. I'll take 1.1% over 0.1% at your local bank.

[scfr]

I feel your pain. No, there is not a lot that can be done right now. Even no-penalty CDs aren't much better.
A couple suggestions (sorry it's not much):

• Follow a web site / blog that focuses on savings rates, to stay up-to-date. I like DepositAccounts.com
• Check what rate you could get now to refinance the mortgage ... see if you can lower expenses that way to help offset lower income
• Stock up the non-perishables in the pantry a bit, especially if you find a good deal on items you use a lot. I'm not talking about going crazy, but food inflation is running high right now and the food purchasing power of those dollars sitting in the bank aren't keeping up with costs

[disneysteve]

Another thing you can do is look for other savings opportunities. Numerous companies, for example, are offering gift cards at a reduced rate, like 5 to 20% below face value. If a store or restaurant or business that you use regularly has a deal like that, it might be worth stocking up. Better to save 5% that way than 1% on your bank account. I recently bought a bunch of Marriott gift cards at 20% off. They don't expire and I know we'll use them eventually so it was basically like getting a 20% return on my money.

[rennigade]

Lucky for me, im not cash heavy.

[Snydley]

I am very cash heavy. I'm hoping to move that cash into a deposit on a home in Florida maybe next year if the vacation real estate market falls sharply.

[kork13]

I am very cash heavy. I'm hoping to move that cash into a deposit on a home in Florida maybe next year if the vacation real estate market falls sharply.

Same here, we're very cash-heavy right now, currently making cash offers on our next home. Gratefully, it won't be for long, as we've got a promising offer out & should only have the cash sitting for about a month. It's always disappointing when they drop rates, even if it's totally expected...

[disneysteve]

I am very cash heavy. I'm hoping to move that cash into a deposit on a home in Florida maybe next year if the vacation real estate market falls sharply.

We're also cash heavy, currently around 12-13% of our holdings. I'm planning to buy a car this year, so 25-30K for that. We have not begun looking at Florida homes but if the market drops, that could be in our future, too. I'd be interested in a short-term purchase down there. Not our forever/retirement home but something we would have to use whenever. Probably a condo or townhouse as it would have less maintenance and be easier to close up and leave for weeks or months at a time.

[bjl584]

I'm keeping cash as well.
I have plans for it, so I'm not too worried that it is not getting much interest

[MaryKay]

Ironic that many of you stash cash (I think that's what you mean when you say "cash heavy") because hubby and I had been talking about taking some of our savings out and keeping it in his gun safe....just in case. I know it won't make any interest, but I'm concerned that everything we have is in that savings, all in one place (Ally). Thoughts???

[disneysteve]

Ironic that many of you stash cash (I think that's what you mean when you say "cash heavy") because hubby and I had been talking about taking some of our savings out and keeping it in his gun safe....just in case. I know it won't make any interest, but I'm concerned that everything we have is in that savings, all in one place (Ally). Thoughts???

No. Bank accounts are perfectly safe. I keep some actual cash on hand just for emergencies but when I say “cash” I mean banks, money markets, CDs.

[bjl584]

Ironic that many of you stash cash (I think that's what you mean when you say "cash heavy") because hubby and I had been talking about taking some of our savings out and keeping it in his gun safe....just in case. I know it won't make any interest, but I'm concerned that everything we have is in that savings, all in one place (Ally). Thoughts???

Most of mine is in the bank. Just in cash.
I don't have hoards of cash in a vault.

[MaryKay]

OK...thanks...got it "Cash" means money not invested in something. For now, we'll just keep it in Ally. We've been with them for several years and have always had our money quickly when we needed it with no problems and no fees.

[ua_guy]

It's a remote possibility, but sometimes those higher rate savings accounts aren't federally insured via FDIC (commercial banks) or NCUA (credit unions). If the bank became insolvent, money in those accounts would be lost forever. Especially true of investment banks (like Fidelity) and many "online" banks which are money market. A higher interest rate generally means you as the saver are bearing more risk.

Every little bit helps and it does make sense to shop rates, but the marginal difference (they're all pretty low) really don't do much unless you've got quite a chunk in there - and then the question becomes, why is it in there and not making money elsewhere.

[MaryKay]

It's a remote possibility, but sometimes those higher rates aren't federally insured via FDIC (commercial banks) or NCUA (credit unions). If the bank became insolvent, money in those accounts would be lost forever. Especially true of investment banks (like Fidelity) and many "online" banks which are money market. A higher interest rate generally means you as the saver are bearing more risk.

Every little bit helps and it does make sense to shop rates, but the marginal difference (they're all pretty low) really don't do much unless you've got quite a chunk in there - and then the question becomes, why is it in there and not making money elsewhere.

I understand what you're saying but Ally is FDIC insured.