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Big duh

Camellia Sinensis

02-18-2010

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Posted by Camellia Sinensis on February 18, 2010, 7:34 pm

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There was a news story on Northwest News today stating that banks were
trying to figure out ways to get people to save more money. Do you think
that maybe if they paid more than .4 percent interest on a regular savings
account or .8 on a "long term CD" people might be more tempted? I mean, we
are talking less than ONE PERCENT! Banks have no problem charging their
customers outrageous fees for everything from using another banks ATM,
overdraft fees, late fees, over limit fees or up to 29% interest on credit
cards, but seem surprised that we aren't racing to the bank to pour more
money into savings accounts. That isn't rocket science. I can remember
banks paying 4 1/2% interest on a passbook saving account back in the 50's
and early 60's. If the banks weren't so damned greedy now people might
think about saving a little money. At today's interest rates you might as
well stuff it under your mattress.

Posted by Michael Black on February 19, 2010, 3:09 pm

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On Thu, 18 Feb 2010, Camellia Sinensis wrote:

> There was a news story on Northwest News today stating that banks were

> trying to figure out ways to get people to save more money. Do you think

> that maybe if they paid more than .4 percent interest on a regular savings

> account or .8 on a "long term CD" people might be more tempted? I mean, we

> are talking less than ONE PERCENT! Banks have no problem charging their

> customers outrageous fees for everything from using another banks ATM,

> overdraft fees, late fees, over limit fees or up to 29% interest on credit

> cards, but seem surprised that we aren't racing to the bank to pour more

> money into savings accounts. That isn't rocket science. I can remember

> banks paying 4 1/2% interest on a passbook saving account back in the 50's

> and early 60's. If the banks weren't so damned greedy now people might think

> about saving a little money. At today's interest rates you might as well

> stuff it under your mattress.

Huh?

You're saying it's better to spend money than get little interest. But,
if the point is to have money, you are better off saving it whatever
the interest than spending it.

Lots of people not only are not saving, they are spending more than they
should. They want things, and they want them now, so they buy on credit
and then pay later or go bankrupt to catch up. They aren't doing that
because the banks aren't paying much interest on savings, it's a whole
different matter.

If I put that ten dollars in the bank, I'll have it at some point when I
need it, whether it grows or not. If I spend that ten dollars right now
I won't have it for when I might really need it.

Michael

Posted by The Henchman on February 19, 2010, 8:37 pm

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> On Thu, 18 Feb 2010, Camellia Sinensis wrote:

>> There was a news story on Northwest News today stating that banks were

>> trying to figure out ways to get people to save more money. Do you think

>> that maybe if they paid more than .4 percent interest on a regular

>> savings account or .8 on a "long term CD" people might be more tempted?

>> I mean, we are talking less than ONE PERCENT! Banks have no problem

>> charging their customers outrageous fees for everything from using

>> another banks ATM, overdraft fees, late fees, over limit fees or up to

>> 29% interest on credit cards, but seem surprised that we aren't racing to

>> the bank to pour more money into savings accounts. That isn't rocket

>> science. I can remember banks paying 4 1/2% interest on a passbook

>> saving account back in the 50's and early 60's. If the banks weren't so

>> damned greedy now people might think about saving a little money. At

>> today's interest rates you might as well stuff it under your mattress.

> Huh?

> You're saying it's better to spend money than get little interest. But,

> if the point is to have money, you are better off saving it whatever

> the interest than spending it.

He didn't say anything about spending money.

I Invest it into index funds or a bond fund with a few stocks on the side.
Savings accounts cost you money because of inflation. I keep about 4 months
savings cash in a bank account and the rest is invested. Savings account
interest is taxed at the highest income rate. Capital gains are taxed at
50% less of income and dividends are taxed 75% less of income , at least in
Canada. Keeping most of your savings in a savings account is the worst
investment choice one can make for mid to long term investing in this day
and age.

Posted by Larry Caldwell on February 20, 2010, 3:10 pm

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Henchman) says...

> I Invest it into index funds or a bond fund with a few stocks on the side.

Good advice. I live in the US, and invest in offshore bond funds. US
interest rates are so low, bonds won't do anything but lose money as the
rates inevitably go up. Take a look at Templeton Global Bond.

Posted by BigDog1 on February 19, 2010, 4:02 pm

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wrote:

> =A0 =A0 There was a news story on Northwest News today stating that banks=

were

> trying to figure out ways to get people to save more money. =A0Do you thi=

> that maybe if they paid more than =A0.4 percent interest on a regular sav=

ings

> account or .8 on a "long term CD" people might be more tempted? =A0I mean=

, we

> are talking less than ONE PERCENT! =A0Banks have no problem charging thei=

> customers outrageous fees for everything from using another banks ATM,

> overdraft fees, late fees, over limit fees or up to 29% interest on credi=

> cards, but seem surprised that we aren't racing to the bank to pour more

> money into savings accounts. =A0That isn't rocket science. =A0I can remem=

ber

> banks paying 4 1/2% interest on a passbook saving account back in the 50'=

> and early 60's. =A0If the banks weren't so damned greedy now people might

> think about saving a little money. =A0At today's interest rates you might=

> well stuff it under your mattress.

Well, your statement that it isn't rocket is correct, but not in your
context. People who have to pay overdraft fees, late fees, and over
limit fees lack discipline and are financially irresponsible. And
anyone who is using a credit card with a 29% interest rate must have a
pretty crumby FICO score.

What's not rocket science is that if you live within your means, pay
your bills on time, and plan your cash needs properly, you won't need
to worry about any of those charges. And, as Michael pointed out, not
saving in light of low interest is about as foolish a theory as I've
ever heard (see my comment above).

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