MoneyRates Blog
Banks Making Money Trading, Losing Money on Credit Cards
In past ages, describing the business model of a bank was simple: banks take deposits from savers, then make loans to borrowers.
In the brave new world of finance, though, the business models of banks, especially certain banks, has become much more complex.
Here are two areas of interest right now:
Banks Making Money by Trading (Yes, Including [...]
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Strong Treasury Auction Good for Mortgages, Not So Good for Savings Accounts
The U.S. Treasury bond market rallied sharply last week on the strength of a successful auction of new T-bonds. Rising bond prices means lower yields, which has a ripple effect on interest rates in general.
The successful auction calmed — at least for the time being — a couple of concerns which had been pushing yields [...]
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Protect Retirement Savings by Expecting the Unexpected
There is no such thing as a sure thing, especially when it comes to investing. Even CDs, among the safest of all places to put your money, can fall in value due to an external factor such as inflation.
However, the constant presence of risk should not prevent us from planning to minimize risk. Especially if [...]
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Time to Start “Going Long” on Certificates of Deposit?
The meetings of the Federal Reserve didn’t used to be worthy of watching, but nowadays, the Fed is activist and consistently makes news.
The biggest news to come out of today’s Fed meeting may have flown under the radar a bit in all the hullabaloo about Bernanke seeing yet more “green shoots” in the form of [...]
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Could Shift In Fed Policy Boost Bank Interest Rates
Depositors in bank accounts – the people who aren’t going bankrupt, aren’t defaulting on their mortgages, and don’t need a bailout — have really gotten the short end of the stick over the past year or so. A recession naturally tends to drive interest rates down, but this has been exacerbated by Federal Reserve policies. [...]
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Savings Accounts a Good Option With No Clear Sweet Spot for CDs
A sharp move upward in intermediate bond yields last week left the market for certificates of deposit unmoved — which is to say, stuck in low-yield territory. All things considered, savings accounts are looking like an attractive alternative to CDs.
At the beginning of Spring, there was a clear advantage just in making the small move [...]
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Hiccup In Stocks Also Bad News for Interest Rates
After a sustained rally over the past three months, the stock market hit a bit of a speed bump in mid-June. Ironically, this is also bad news for investors in interest-bearing accounts such as money market and savings accounts, and even certificates of deposit.
The reason is that the stock rally had been accompanied by a [...]
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Proposed Financial Reforms — What They Could Mean for Interest Rates and You
Treasury Secretary Timothy Geithner and National Economic Council Chairman Lawrence Summers recently outlined a proposal for financial reforms the Obama administration hopes to enact. At the center of the proposal are higher capital and liquidity requirements for banks, and more comprehensive oversight for complex financial institutions.
Fair enough — but what does this mean to you?
As [...]
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Higher Savings Rates Boost Bank Health
Government officials were cautiously optimistic about the implications of an announcement this week that 10 major banks would be paying back the emergency TARP funds they received during the banking crisis. The caution stemmed from the recognition that not all the problems banks face have been solved, while the optimism was a natural reaction to the [...]
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Ben Bernanke Wrestles with Congress and Interest Rates
Federal Reserve Chairman Ben Bernanke’s recent warning to Congress about the federal budget deficit was not misplaced, but it was a little curious. This deficit has been a long time in coming. While its growth has been accelerated by emergency measures to address the financial crisis, the seeds were sown when the government continued to [...]
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Bankers versus Savers
You probably did not see it mentioned in your local newspaper, but the American Bankers Association (ABA) made news last week when in a letter addressed to the FDIC they publicly chastised Ally Bank. The problem? Ally Bank has been offering deposit rates that are too high in comparision to the rest of the banks in the country. That [...]
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What Interest Rate Shoppers Should Watch About Inflation
Inflation has been on the lips many market observers lately, despite the unusual bout of deflation we’ve seen recently. For you rate fanatics, or for that matter anyone concerned about protecting their savings from the ravages of inflation, this discussion has important implications. A return of inflation would make it a bad time to be [...]
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Black Swans and Savings Rates
Sometimes scientists are confounded. Take the black swans for example. When they were discovered in Western Australia it was considered an impossibility. One day there was no such thing as black swans and the next day there they were. Today the term ”black swans” refers to major unpredicted events. September 11, 2001 is an example. Although the events leading up [...]
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Yield Curve Action May Signal Time for a New Interest Rate Strategy
One of the fascinating things about the US Treasury yield curve is that it is a pure, up-to-the minute indicator of what investors as a group think about interest rates. Federal Reserve rates, while they feel the pull of economic and market forces, are artifically set as a function of government policy, and only change [...]
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