Hi everyone! Hope everyone is doing well in this economic crisis known as the “Great Recession”. The unemployment rate hit 10.2% (and a lot higher in some particularly hard-hit states). We could be in this rut for several years.
Now I hope you guys paid attention in Macroeconomics 101. Remember the Federal Reserve has a responsibility to fight recessions. One of the techniques used is to lower the interest rate. This makes it cheaper for consumers to borrow money to buy stuff (thus increasing demand) and for business to make investments. Both of these effects create jobs and add to economic growth.
All is fine and dandy except for bondholders and people who have savings accounts! This growth strategy has taken money out of our pockets. It was only two years ago when rates were 4.5%. Rates have fallen to 1.3%! We won’t know what inflation for this year is until 2010 but I wouldn’t be surprised if it is quite close. This is especially true if there is a spike in gasoline prices.
So if you don’t have an account already, should you sign up? Even though there is a chance that the rate is below inflation (and thus still technically burning up), ING direct orange savings still pays a great deal more than typical money markets and bank accounts. I have a Bank of America. I think I’m getting like .1% or something ridiculous like that. I mean honestly what are they thinking, offering such a nominally low rates? Many of their customers are wasting money by keeping their money in such an account.
O the cost of laziness…