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Only 1.25% Interest

February 27th, 2010 at 05:44 am

Our money market account is now only paying us 1.25% interest. Last month we earned $11.39.

The money market holds our emergency fund and savings for our real estate taxes and homeowner's insurance, so it really isn't money I'm expecting a large return on.

I'm just disappointed that the rates are still so low. I look forward to the day when they start to rise again!!

I read an article about saving today in our newspaper. The most important thing is to start, if you haven't already. Even a few dollars a month that you save for a goal can add up. Just don't dip into those funds until your goal is reached!! Trust me. It is much more satisfying to reach a goal than drink a mocha or eat a hamburger.

The interest on your savings is a bonus, even if it is a small one right now!

8 Responses to “Only 1.25% Interest”

  1. fern Says:

    I agree with everything you said except the part where you said, "The interest on your savings is a bonus." I don't think we can afford to think of interest as a bonus when inflation was 2.6% last month.

    If you're earning less than that now, that means you're LOSING money on your savings. Don't forget, banks are making money on your money by paying you a lower rate than what they're making themselves investing it elsewhere.

    Maybe try a local credit union; credit unions almost always pay better rates than banks. Or maybe, if you don't think you'd likely need access to ALL your emergency money all at once, think about laddering CDs.

    Just a thought.

  2. fern Says:

    Just for the heck of it, i checked savings rates at my local credit union. They were just paying 1.5% although they had a "premium savings account" that paid 3%. I'm guessing it required a very high minimum balance.

  3. creditcardfree Says:

    Fern, I understand your point. However, our money market money is for emergencies only. It isn't really there to earn any money. Liquidity is the number one goal. We invest 16% of our income for retirement in attempt to make up for inflation.

    Because of my husband's deployment we will take advantage of a program that will pay us 10% annual interest while he is gone. That I am looking forward to!

    If one is not saving anything, the interest is a good incentive, even if small at this point!

  4. Ken Says:

    You might want to look into reward checking accounts which pay 2x to 4x of your money market rate. 100's of small banks are offering these around the country. There are some downsides with reward checking, but it's another alternative for your safe money. You can find some good reward checking resources at Google. Just search for "reward checking".

  5. toyguy1963 Says:

    But I was saving for a hamburger. LOL. Sorry I can't help myself sometimes.

  6. frugaltexan75 Says:

    I think my savings are at about that same rate. The same balance that a year ago was earning around 30 dollars a month in interest, last month made a whopping 7.xx Rolleyes

  7. ceejay74 Says:

    I know that in actuality if your money isn't growing fast enough, it's shrinking. Still, the point is well taken that putting something in a savings account, and starting as soon as possible, is hugely important. Someone putting away $2000 a year and earning 1.5% interest is still better off than someone who hasn't started saving yet. The money may not be worth as much down the road as it is right now, but it will still have value. It's still money in the bank.

  8. baselle Says:

    I'm doing better finding money on the sidewalk than I am on interest in a few of my accounts. The interest rate has not kept up with inflation for a number of years now (just worse than usual), so its best to create your emergency fund then figure out how to invest your savings above and beyond.

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