Online savings accounts lowering their interest rates?

[Terpskins99]

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I read in previous posts about online savings accounts that offered 4.5 and even 5% interest rates. But when I checked up on them, those numbers appear closer to 3-3.25%.

Also, almost every site mentions that the interest rate is subject to change by the bank whenever they want.

Better than nothing, I guess.

 

[IceMan0824]

I read in previous posts about online savings accounts that offered 4.5 and even 5% interest rates. But when I checked up on them, those numbers appear closer to 3-3.25%.

Also, almost every site mentions that the interest rate is subject to change by the bank whenever they want.

Better than nothing, I guess.

Please tell me you've been under a rock the entire time.

With the Fed cutting the fund rate, the banks (and savings rate) follow suit.

 

[Terpskins99]

Please tell me you've been under a rock the entire time.

With the Fed cutting the fund rate, the banks (and savings rate) follow suit.

Well excuuuuuse me! 😡 I'm pretty new to the whole high interest online savings account deal (I'm still not sure how it differs from an online money market account). To be honest, I have been under a rock. More like a large umbrella called medical school. It blocks out everything, including the sun.

Frankly, I don't really keep up with the news unless it has something to do with MLB or the NFL.

So anyhow... in the future whenever the fed decides to increase the fund rate, does that mean every account will likewise increase their rates? Or will the current account stay the same and you would have to apply for a new account under a different rate?

 

[DoctorWannaBe]

Well excuuuuuse me! 😡 I'm pretty new to the whole high interest online savings account deal (I'm still not sure how it differs from an online money market account). To be honest, I have been under a rock. More like a large umbrella called medical school. It blocks out everything, including the sun.

Frankly, I don't really keep up with the news unless it has something to do with MLB or the NFL.

So anyhow... in the future whenever the fed decides to increase the fund rate, does that mean every account will likewise increase their rates? Or will the current account stay the same and you would have to apply for a new account under a different rate?

Banks are always changing their interest rates depending on what's going on in the financial markets. For example, I have an account with ING Direct (an online bank) and they have dropped their interest rate at least 5 times in the last several months. Over the last few years my rate has gone up because the economy was better, so the changes can go either up or down. With a savings account, you don't have to open a new account to get the new interest rate.

 

[Doctor]

Frankly, I don't really keep up with the news unless it has something to do with MLB or the NFL.

If you have so little time to devote to news, I recommend ditching sports and becoming a fan of the economy or world events. Much more fulfilling. 👍

Although, I sorta keep up with sports too... (ACC Basketball mainly, which I suspect is familiar to you as well) just not nearly as much as I did when I was a kid.

 

[kami333]

Banks are always changing their interest rates depending on what's going on in the financial markets. For example, I have an account with ING Direct (an online bank) and they have dropped their interest rate at least 5 times in the last several months. Over the last few years my rate has gone up because the economy was better, so the changes can go either up or down. With a savings account, you don't have to open a new account to get the new interest rate.

No joke, it's actually kind of been funny...

Mar 19, 2008 Interest Rate Change to 2.960% (3.00% APY)
Mar 11, 2008 Interest Rate Change to 3.057% (3.10% APY)
Feb 1, 2008 Interest Rate Change to 3.348% (3.40% APY)
Jan 23, 2008 Interest Rate Change to 3.590% (3.65% APY)

Best rates right now are Alliant CU savings at 4.35 or there are several rewards checking that gives 6% (but you have to use debit card certain amount of times each month, have direct deposit, etc).

As far as rates go, most banks will change your interest rate with the fed rate, up or down. If not, it gives you a good excuse to switch to a different bank with a better rate.

And there is no difference between a savings account and a money market deposit account other than whatever rules that bank makes up (usually savings accounts have lower minimum balance requirements), they are both FDIC insured. A money market fund account is not insured.