Are savings accounts worth it anymore?
TEXT OF STORY
Bill Radke: We were talking about the Federal Reserve there. You know the low interest rates Ben Bernanke is supporting are a useful tool for propping up the economy. But for consumers, they are a double-edged sword. If you’ve got a savings account, you know what I’m talking about. Oh, thanks a lot, bank. Thanks for the eight cents interest I just got on my thousand dollars.
Marketplace’s Jeremy Hobson reports the idea of a savings accounts has lost some of its appeal.
Jeremy Hobson: I guess any account where you don’t lose money is a good thing in this economy. But the mattress is starting to look pretty appealing. The average interest rate for a savings account is now less than 1 percent.
And Mike Moebs’ with the economic research firm Moebs Services says while banks have long had required minimums for savings account balances…
Mike Moebs: Now they’re starting to enforce those minimums and also to have fees for falling below those minimums.
That’s in part because banks can borrow money so cheaply from the government right now, that a high maintenance customer who only saves a little and does a lot of transactions just isn’t worth it anymore.
Moebs: If you’re planning on having $100 or $200 savings account, good luck in trying to find somebody that’s not going to eventually charge you a fee for that, because they just can’t afford to have those accounts anymore.
But before you rush over to your local bank to take all your money out, Mickey Cargile with WNB Private Client Services says remember that savings accounts also serve another purpose.
Mickey Cargile: The savings account fills a role in that that’s your rainy day money, and by segregating the money from your checking account, it helps keep you from spending it.
And Cargile advises his clients to keep six months of living expenses in a rainy day fund. He says when interest rates start heading back up, savings accounts will become more profitable for consumers again. That is, if those bank fees don’t eat up all the money first.
In New York, I’m Jeremy Hobson for Marketplace.
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