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Only 1.25% Interest

February 27th, 2010 at 01:44 pm

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!

Posted in Saving | 7 Comments »

7 Responses to “Only 1.25% Interest”

  1. fern Says:
    February 27th, 2010 at 03:20 pm 1267284059
    1267284059

    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:
    February 27th, 2010 at 03:24 pm 1267284243
    1267284243

    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:
    February 27th, 2010 at 04:40 pm 1267288821
    1267288821

    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. toyguy1963 Says:
    February 27th, 2010 at 06:16 pm 1267294616
    1267294616

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

  5. frugaltexan75 Says:
    February 27th, 2010 at 07:57 pm 1267300620
    1267300620

    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

  6. ceejay74 Says:
    February 27th, 2010 at 09:08 pm 1267304928
    1267304928

    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.

  7. baselle Says:
    March 1st, 2010 at 05:34 am 1267421641
    1267421641

    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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