Savings Account Rates

Rates on savings accounts, certificate of deposit accounts and mortgages have been going down the past year, this is the result of the economy tanking and the government programs in place that are trying to get the economy going again by lowering rates. 

The U.S. Treasury Department has been lending hundreds of billions of dollars to  large and small banks since the Troubled Asset Relief Program (TARP) started in the fourth quarter of 2008.

TARP has also caused savings rates to go down since banks have a cheaper source of funds from which they can borrow. There has been less of an urgent need to offer promotional deposit rates to entice depositors.

The Federal Reserve has also had its hand in forcing rates down.  The Feds have kept the Fed Funds rate at a starting range of 0 percent to .25 percent since late last year to get the credit markets and the economy going again.

The Feds have also been flooding the markets with newly printed money, buying large quantities of mortgage backed securities to further drive mortgage rates down.  A side affect of driving mortgage rates down is lower rates on deposit accounts.

Rates on savings accounts will stay low until the end of the year or early next year.  When the economy starts to recover the Feds will have to start raising the Fed Funds rate to keep a lid on inflation. This is will cause savings account rates to start creeping up again.