BIG NATIONAL BANKS OFTEN HAVE THE WORST INTEREST RATES
Are you looking for the best money market rates or CD interest rates? If you are I can tell you the one place NOT to go is to the big national banks you find all over the country. Institutions like US Bank, Bank of America, Chase, Wachovia, and Wells Fargo will not have the rates you are looking for. It is almost always worth it to check out the smaller banks in your city as they have a much better chance of offering you an interest rate that is higher than what you will get at the bigger banks.
By far the best place to find the highest rates is the Internet. However, there are still a lot of people that don’t feel comfortable opening an account online with some bank they have never heard of just to get an interest rate that is slightly above what they can get in town. Maybe they can get more than “slightly above” but they just don’t have a good comfort level doing it, especially if they have tens of thousands of dollars to put in.
That type of person feels best walking into a financial institution, opening up an account, and actually handing someone a check. The human interaction is important and it makes them feel a little better about parting with their money. At least they know where it is going rather than the online way where you have to do a wire transfer to who knows who at who knows where bank they have never heard of just because they see they are getting a better rate. Some people are just fine with that but others aren’t.
If you are one of the ones that wants to personally open up an account and give your check to a real person, that means you are going to be limited to the banks in your city. This post is to tell you NOT to start with the big banks but to start with the smaller banks and credit unions.
I found the best interest rates at a credit union in my city that anyone could belong to and the rates were almost DOUBLE what Bank of America and the rest would give me. Credit unions are an option I never considered until my husband mentioned one and when we did the research we found that the money was insured up to $250,000 through the National Credit Union Share Insurance Fund (NCUSIF). This was $250,000 insurance was just made permanent on September 17, 2010 so you can invest without losing any sleep.
Again though, check your local credit unions and small banks FIRST when you are looking for the best money market rates or any other kind of interest rates. You will most likely find that the rates one of them offers will beat the rates that all the big banks give you.
WILL THE NOVEMBER ELECTION AND REPUBLICANS HELP CHANGE INTEREST RATES?
You might be asking yourself will interest rates go up now that we have had the election and we have had a big change in the House Of Representatives? Unfortunately, the short answer is NO!
Interest rates are low right now because the Fed is trying to stimulate the economy. With interest rates low, it is speculated that it is easier for people to borrow money and the more money they borrow the more they will spend. In other words, the cost of money is low and it is easy to get your hands on it thus you will spend more. That is of course, a very general and simplistic explanation.
Things haven’t really been working out that way though, as the economy has not recovered like the current administration had hoped. While rates are low, the requirements to be able to borrow money are high and this has made getting a loan difficult. Banks and other lending institutions are being much more careful now who they loan money out to as they are being watched closely after all the bailouts. They don’t want to mess up again.
One of the reasons the election was so important and went in favor of the Republicans is the economy. The unemployment rate has been around 10% all year after President Obama promised it wouldn’t go over 8% if he got the bailouts. When the economy is bad, people are angry and they generally want to vote out whoever is in charge. In this case it was the Democrats and they took a real beating.
Money market interest rates remain right near their all time low and things are just not going to change for now. The election won’t change a thing as we need to see the economy pick up a little before we see any talk of the Federal Reserve raising interest rates. Hopefully that will happen sometime in 2011 but I am not holding my breath.
You can see a chart of the history of interest rates from 1955 to the present. Notice that they have never been lower than they are today and that is not good for all of us who need interest income.
