Savings Accounts Return (for Some)
All of the recent rate changes by the Fed haven't been reflected in the annual yields on savings accounts, which have remained so low as to render such accounts virtually useless. An interesting development, however, is the recent growth of high-yield online savings accounts. HSBC, for example, has drawn interest from consumers by offering an annual savings rate in the neighborhood of five percent. Other banks, such as ING, EmigrantDirect and Citibank have offered similar rates and programs. Certainly this is good news for consumers - but what about those who don't have the resources to maintain online savings accounts? Owning a computer with regular, safe access to the internet is a luxury many do not enjoy.
The disparity between rates is enormous. Consider HSBC, which lists current rates of 4.8% APY for online savings accounts compared to only 0.25% for a standard savings account. Given the popularity of the new online accounts (and the low costs of providing those acounts), it would not be a surprise to find banks competing heavily for business by offering high promotional rates and other perks while leaving standard accounts to languish.
Thus, the good news that comes with a shifting focus to online banking is limited to more affluent consumers; we need to remain aware of the underlying disparity that impacts those who don't have the means to maintain online accounts. If we don't, the class divide will continue to widen as those with the lowest incomes are marginalized further - those who, in fact, could benefit the most from a reasonable rate of return on the little money they are able to save.
At BankRate.com HSBC is now advertising 5.05% interest savings accounts. If you have enough to invest right now, I would stay away from the stock market because there are too many indicators that are pointing to Bad Things happening soon.
See calculatedrisk.com,
bigpicture.typepad.com,
oftwominds blog
and the Housing Bubble Blog
among others. If anyone knows of some good economics blogs, please post them.
Find the Truth. Do Justice.
July 4, 2006 5:33 AM | Reply | Permalink