Savers, It Seems, Have Saved the Banks
July 28, 2009
Saving is back in style.
After years when many people thought it irrelevant to be worrying about getting the best savings account interest rates, the best CD interest rates, or the best money market account interest rates, Americans are realizing that if you don't save for a rainy day, you get rained on.
The headline statistic highlighting this trend towards saving can be seen in the sudden jump of the American savings rate to 7 percent. Bank deposit increases of 1.7 percent in May tell the same story. Also note the increasing reliance on debit cards for purchases, rather than credit cards.
These statistics, while insighftul, may be missing the larger big picture point: savers, it seems, have saved the banks.
As of the end of June, 52 U.S. banks had failed in 2009. That's more than double the rate of 2008, but not nearly as devastating as what could have been.
The FDIC raising of the insurance limit to $250,000 per depositor per account was a big move. But equally essential was the move by millions of individual people to start saving a little more.
That little more has added up to a lot, in the form of a solidly surviving U.S. banking system.
