Comments on: Saving Interest Rate Is Not Low Enough http://www.journeyofsuccess.net/2009/07/saving-interest-rate-is-not-low-enough Piggy's Blog Wed, 07 Apr 2010 18:37:31 +0000 hourly 1 http://wordpress.org/?v=3.0 By: Meg http://www.journeyofsuccess.net/2009/07/saving-interest-rate-is-not-low-enough/comment-page-1#comment-11686 Meg Wed, 08 Jul 2009 21:52:58 +0000 http://www.piggysblog.com/?p=1447#comment-11686 As a banker, I have to point out that we do not generally make any more money off deposits or loans when interest rates move - we adjust the rates based on our cost of funds (which is controlled by a variety of factors outside of us, like Fed policy, inflation rates, the cost of FDIC insurance, etc). Banks that want to stay in business make a point of being "interest rate neutral." That means we hedge our bets and whether loan rates and deposit rates go up or down, our spread remains the same. In fact right now, our spreads are so thin that we are actually LOSING money on almost all interest bearing deposits and on many loans (like those set up to float with the Prime rate, which we never projected to be so low as it is now). As a banker, I have to point out that we do not generally make any more money off deposits or loans when interest rates move – we adjust the rates based on our cost of funds (which is controlled by a variety of factors outside of us, like Fed policy, inflation rates, the cost of FDIC insurance, etc).

Banks that want to stay in business make a point of being “interest rate neutral.” That means we hedge our bets and whether loan rates and deposit rates go up or down, our spread remains the same.

In fact right now, our spreads are so thin that we are actually LOSING money on almost all interest bearing deposits and on many loans (like those set up to float with the Prime rate, which we never projected to be so low as it is now).

]]> By: rob http://www.journeyofsuccess.net/2009/07/saving-interest-rate-is-not-low-enough/comment-page-1#comment-11684 rob Wed, 08 Jul 2009 18:55:54 +0000 http://www.piggysblog.com/?p=1447#comment-11684 Yes, it's very disappointing. I'm longing for the days when the interest rate was as high as 4 - 5%! At least it beats the near zero interest rates in Japan banks. Yes, it’s very disappointing. I’m longing for the days when the interest rate was as high as 4 – 5%! At least it beats the near zero interest rates in Japan banks.

]]> By: FB @ FabulouslyBroke.com http://www.journeyofsuccess.net/2009/07/saving-interest-rate-is-not-low-enough/comment-page-1#comment-11652 FB @ FabulouslyBroke.com Mon, 06 Jul 2009 00:18:14 +0000 http://www.piggysblog.com/?p=1447#comment-11652 I did think about that :) But it's nice having a nest egg, even if it isn't earning a ton of interest. I'd rather have the liquid cash just in case of an emergency rather than hunting for the highest interest rate. I did think about that :) But it’s nice having a nest egg, even if it isn’t earning a ton of interest. I’d rather have the liquid cash just in case of an emergency rather than hunting for the highest interest rate.

]]>