MONEY MARKET INTEREST RATES WILL REMAIN LOW IN 2010
The Fed has just said today (3/16/2010) they will keep interest rates at their record lows and that is more bad news for anyone who has money to invest and wants interest income. This Associated Press story is one of the few I have ever seen that actually acknowledges that low interest rates hurt people who rely on interest income to supplement their fixed incomes.
The people who fall into that category are mostly seniors and retirees who are living on what social security pays them as well as what they earn in Interest on the money they have saved. Seniors seem to be the forgotten generation in our society as few politicians and news outlets pay much attention to their plight.
If you need to borrow money, now is a great time if you can somehow get a loan. That is the problem with these low rates: everyone is suffering. The financial crises has made lending institutions raise the requirements to get loans and many people cannot qualify. What is the good of low rates if you can’t get a loan?
With rates this low, people who have money remain puzzled when trying to figure out what to do with it. The best money market interest rates are not that far behind rates of bank CD’s with the advantage of giving you the liquidity to get out of them at any time. However, with the Fed’s promise not to raise rates for an extended period (experts believe that means at least not for 6 months), you might as well lock up your money for a year if the rates aren’t going to change.
Your best bet to get the highest money market interest is to try to find a bank or institution that has some sort of a promotion going on. Sometimes you can get a decent percentage increase in rate if you find a bank that is offering a bonus rate. Usually the hoops you have to jump through to get the higher rate aren’t that bad and you will end up getting as much as a half of a percent more which at these low rates is a significant amount.
