Skip to main content

War on savings continues: bank fees and zero rates

Bank fees and ultra low interest rates continue to hit US savers hard. Bloomberg has the story in, "Savers Pay Banks to Keep Cash as Rates Dip, Fees Rise":

"It’s getting tougher for U.S. savers to find a bank where they won’t end up paying to keep their money safe.

The average interest paid on savings, checking, money-market and certificate of deposit accounts fell to 0.99 percent in July, the first dip below 1 percent in a decade, according to researcher Market Rates Insight. Banks also have been raising fees and adding new ones, most recently in response to the financial-services overhaul bill that became law July 21.

The result is that an increasing number of savers are seeing their deposit earnings eaten up by charges. That’s frustrating people like Ken Ward, who recently passed on a savings account with a 0.01 percent interest rate at the Chase bank branch near his home in Wantagh, New York..."

As if years of hyper-spending and living beyond our means consumption haven't hurt the average American family's balance sheet enough, we continue to struggle through a period in which near zero rates and real world inflation take their toll on savers.

Here's an interesting (and depressing) little fact from Tradefast: "if you need/want $100,000 of income in retirement, you only need to buy $26.7 million of US Treasury 2 year notes to reach your goal".

Of course, if you go out 10 years at 2.51% (current yield on 10 year US Treasury), you'll probably only need about $4 million worth of Treasury bonds to reach the same income goal.

It's interesting to note that many retail investors seem to have abandoned the stock market over the past 30 months, taking $209 billion out of domestic stock funds while $559 billion flowed into bond funds during that time. If these ultra low rates can't spur investors into the stock market, it seems that nothing (short of an incredible, longer-term rally) can.

One of the big investing themes in recent months has been the search for yield, as US savers and investors reach to grab any interest income that they can. Meanwhile, as mainstream news outlets tout vehicles such as junk bond funds and ETFs to yield starved investors, onlookers such as John Rubino warn this trend will only end badly for savers and investors.

Low to negative real interest rates continue to greet savers and investors; it seems the war on thrift and savings continues unabated.

Related articles and posts:

1. The Low-Interest Rate Trap - Dollar Collapse.

2. Investors Shake Up Funds w/ Record Bond Love Affair - Bloomberg.

Popular posts from this blog

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL!  Please bookmark our new web address at Financetrendsletter.com Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner .   Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead! As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter . You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter).  Stay up to date with our real-time insights and updates on Twitter .

Moneyball: How the Red Sox Win Championships

Welcome, readers . T o get the first look at brand new posts (like the following piece) and to receive our exclusive email list updates, please subscribe to the Finance Trends Newsletter .   The Boston Red Sox won their fourth World Series title of t he 21st century this we ek. Having won their first Se ries in 86 years back in 200 4, the last decade-plus has marked a very strong return to form for one of baseball's oldest big league clubs. So how did they do it? Quick background: in late 2002, team own er and hedge fund manager, John W. Henry (with his partners ) bought the Boston Red Sox and its historic Fenway Park for a reported sum of $ 695 million. Henry and Co. quickly set out to find their ideal General Manager (GM) to help turn around their newly acquired, ailing ship. This brings us to one of my fav orite scenes from the 2011 film , Moneyball , in which John W. Henry (played by Ar liss Howard) attempts to woo Oakland A's GM Billy Beane (Brad Pi

William O'Neil Interview: How to Buy Winning Stocks

Investor's B usiness Daily founder and veteran stock trader, William O'Neil share d his trading methods and insights on buying winning stocks in an in-depth IBD radio interview. Here are some highlights from William O'Neil's interview with IBD: William O'Neil's interest in the stock market began when he started working as a young adult.  "I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."    He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.