WHY MANY PEOPLE THINK LOW INTEREST RATES ARE GOOD
There are two ways to look at low interest rates: good if you want to borrow money and bad if you have money and want to invest it to earn interest.
The Low Interest Rates Are Good Crowd
It seems that 9 out of 10 articles you find online that discuss or mention interest rates are written from the perspective that low rates are GOOD. You often read of the “risk of higher interest rates” as though they were a bad thing. They assume that all companies and regular people need to borrow money and low interest rates help them do that. After all, that is why the Federal Reserve and the current President have manipulated rates and kept them so low: so that businesses and consumers can easily borrow money and then turn around and spend it, supposedly spurring on the economy.
But I get tired of reading how low interest rates help people and help the economy, especially since the requirements to be able to borrow money have been tightened so much since the Obama bailout of 2009. I mean, it’s great to be able to get a home loan at a low rate IF you can get that loan. Unfortunately, lots of people find they don’t qualify for those loans and so low interest rates don’t help prospective homeowners and other business people if they can’t get the loans in the first place!
These low interest rates haven’t helped the economy like they were supposed to as we still have unemployment at 9% and we are still in a recession. Additionally, the economy is a mess and the United States keeps piling on the debt with no end in sight. I just don’t think these low rates have help that much.
But Low Interest Rates Are Bad For Many People
My feeling is that low interest rates are BAD because I have money to invest. I want to be earning more than a paltry 1% every year on my money and I don’t want to be penalized just because I have been smart and saved all my life. There are lots of groups of people that get hurt with low rates such as seniors and retirees who need to be making all they can from their retirement savings. Even the unemployed need higher rates to help them stretch the money they do have and make it last as long as possible.
Right now in this country there is an attack on the “rich” which has been going on for years. Jealousy has started to take over our nation and anyone who has money saved is a target. Nobody cares whether the retired couple living down the street makes the money they need from their life’s savings to keep their heads above water.
People who have put away and saved money have worked hard for it. They want and need to make as much interest as they can. In many cases they need to earn interest to keep paying their bills. Interest rates being so low is a BAD thing as we need to once again go back to rewarding the people who are smart with their money, don’t overspend, and are actually trying to put enough money away to be able to afford retirement.
It’s time we start rewarding the savers and not the borrowers!
ONLINE SAVINGS ACCOUNTS VS. MONEY MARKET ACCOUNTS
The most appealing characteristic of money market accounts is that they pay a higher interest than checkbook savings accounts AND you can get your money out at any time with no penalty. They are a place to park money for short or long periods of time while you decide what you want to do with it and still earn a decent bit of interest. Right now though, you can’t get a “decent” interest rate in anything at all with rates so low.
A good alternative right now to putting your cash in a money market account is to put it in an online savings account. You probably already know what a savings account is at your local bank (you usually get automatically get one when you open up a checking account), but what is an online savings account and why is it better?
Right now you can get an ING Direct Orange Savings Account that pays 1.09% interest and you can get up to 6 withdrawals per month with no penalty. That rate of interest is better than you can get with most money market accounts and there are no fees and no minimum amount you need to open the account. The 6 withdrawals per month is very similar to a MMA so you are essentially getting the same thing and you can access it right online.
Online banking may be new to you but it is just as safe as walking into your own local bank. Everything now days is moving online and that includes banking and investing. To get the best money market rates or any other kinds of interest rates in this new age, you need to go online to get them.
To open your Orange Savings Account and get your money into it you will need to link it to an existing checking account with any bank. Once the two accounts are linked, you can put money in and take it out of your new online savings account through your checking account. Easy!
Online savings accounts like these that pay over 1% of interest are so much better than the checkbook savings accounts at your neighborhood bank that pay practically 0% interest. They give you the same flexibility of being able to withdraw your money at almost any time and they actually give you some interest to boot!
The only difference between this type of account and a real money market account is that there is only one interest rate no matter how much you put in. With a money market account, the more money you put in the higher the interest rate you will be eligible for but with rates as low as they are now, it is unlikely you will be able to get anything much higher than 1% anyway.
