Financial rant!!

[Silly Moustache]

In2014, my bank current account offered me 3% interest paid monthly on a balance up to £20k. plus cashback on all my household direct debits.

Then, they reduced it to 1.5% - I didn't like it but still better than most.
Then they reduced it to 1%.
Now they have reduced it to 0.6% and capped monthly cashbacks to £5 (the monthly banking charge is £5!

So, no point in keeping money with them any more.

Best cash savings either taxable or tax free is .9% !!!

Best deal (on paper) is a government bond offering a whopping 1,5% AER.(haha!)

So, yesterday I tried to apply - online - it took 2 hours! Then the transaction failed!
Today, I rang them - 20 minutes wait, then apparent I had to go over every single thing I'd given their online application!

They asked me all kinds of pretty intimate financial details and DID A CREDIT CHECK ON ME!! (I'm giving them money!) it took an hour!

Seems no-one wants money at present.

Is there a parallel in the USA? Canada? Australia?

[rllink]

In the US bank accounts pay little interest and are pretty much a place to park money and have it acessable. No one invests in a bank account expecting to grow with interest.

In the US, banks are highly regulated as I would expect that in the UK they are as well. Because of the regulations banks have to ask lots of questions, but it isn't that hard to open an account. In my experience it has been pretty seamless, but still lots of questions and checks. But the government is so scared to death that criminals will hide their ill gotten gains and launder them through a bank account, or that someone will hide money where they can't see it to tax it, that they regulate them to death. We have had a few banks get caught playing the game fast and loose and it did not go well for them. So then they they all tighten back up they tend to over do it sometimes.

[Inyo]

Originally Posted by rllink

I'm my experience.

.

Good to know.

[CoffeeFan]

Originally Posted by Silly Moustache

Is there a parallel in the USA? Canada? Australia?

Nope, no there isn't.

Send me all the cash you want and I promise not to do a credit check on you...

[foxo]

I’m 31 and I remember my first savings account had an interest rate of 6% prior to the credit crash. It’s a shame, there’s little incentive to save these days other than for mortgage deposits.

[619TF]

It's the same over here in the US but keep in mind that inflation is relatively low right now (or WAS pre virus), and that interest rates on loans is at record lows. That means that nobody is going to pay you to park money and that relatively it's probably giving you a net gain close to the same thing as you were getting before. My grandfather would marvel that a decent amount of people today are making 10 or 20 thousand dollars a year but nowadays that's poverty level income. Everything is relative and, knowing that, I try not to get worked up about interest rates on my savings account.

[TeleBluesMan]

Currently the advantage to keeping money in the bank is the FDIC insurance.

[DavidE]

In the US most checking accounts don't seem to pay interest. Savings accounts appear to pay 0.01 or 0.02% interest. Money markets don't do much better. In the spring I put money into a 3% CD that's coming due. There's nothing even close to that now.

[merlin666]

Low interest is a problem in most northern countries and is magnified by covid. Yeah there are people who had financial impacts and in many countries they got generous handouts. Here in Canada some of my friends get more handout money than they previously earned. But if your life depends on interest payment from your savings then you are really screwed and there is no help. All you can do is cash in your savings. So far I lost about seven years worth of retirement income since the pandemic started.

[buddyhu]

Originally Posted by foxo

I’m 31 and I remember my first savings account had an interest rate of 6% prior to the credit crash. It’s a shame, there’s little incentive to save these days other than for mortgage deposits.

Back in the 80's, my mother (who was pretty savvy about financial stuff) urged me to buy a 30 year T-bill (U. S. Federal government bond) that was paying 13.75% interest, and I did. I held it for 30 years until it matured. One of my better investments.

But today, I don't know where to put money. Gold and silver are doing well, (ETF's like GLD and SLV) for the past year or more. But bonds yield very little, bank accounts yield next to nothing, and I find the stock market to be a bit scary given the economic uncertainties.

I had a small bank CD mature last month; even a 60 month CD was yielding much less than 1%. So I guess there are equivalents in the US to what Silly is ranting about.

[Kerbie]

Originally Posted by buddyhu

Back in the 80's, my mother (who was pretty savvy about financial stuff) urged me to buy a 30 year T-bill (U. S. Federal government bond) that was paying 13.75% interest, and I did. I held it for 30 years until it matured. One of my better investments.

Wow... 13.75%. That was a 30-year treasury bond. The bills have shorter durations. That's excellent timing... they topped out in that era around 14.5%, so you were sitting pretty for years and smiling all the way to the bank.

[M19]

This is all a product of the central banks keeping the interest rates low, low low to try to stimulate the economy. None of them consider the deleterious effects on retirees relying upon fixed income securities. The monthly interest on my Money Market funds has dropped 80-90% in the last 6 months.

The only way to try to stay ahead is to keep more in equities (and hope the market doesn't crash). It did look bleak in March and April, but the US markets have rebounded in the summer. Here's hoping they don't have a relapse because of our re-escallating Covid risk.

[Mr. Jelly]

The 10 year U.S. Treasury notes are paying .55 %. To get paid a higher percentage means that you have to suffer more risk of losing money. Governments are keeping interest low to push people to invest in riskier things like businesses and stocks etc. You can take this as a statement from governments that economies are bad. Governments are trying to keep their economies stock markets from making major corrections or failing. As long as institutions can get cheap money from the government there is no reason for them to pay you or I more for it. You can look at this like we are competing against our governments. This is one of the reasons stock markets are doing so well. People can borrow money at 1% put it in some stocks and when the stock goes up they can sell the stock and make a percent or two and pay off the loan. When you do that with millions of dollars it is real money. Obviously this won't go on forever because ultimately the tax payers are the ones borrowing the money to support the economies. It will need to be paid back at some point.

[Kerbie]

Ten-year treasuries are called notes. Those are some interesting views on the powers of our government. A number of factors affect interest rates and our government's attitude towards the rates is only one of many.

[rokdog49]

We have several CD’s mature within the last year. The very best we can find right now is around 1.75% for three years from a bank we never heard of and it would be online of course. We did have a couple of CD’s with an online bank in California last year that we laddered at 3 years and got 3% and 2.5% respectively. We decided not to do that again as contact with those people is minimal to nonexistent if you need it. Anyway, those percentages are long gone.
Recently one of the banks we deal with offered 1.25% on a money market fund so we dumped the two matured CD’s into that. It’s totally accessible with no upfront fees or penalties for withdrawal so that’s not too bad.
When the banks are offering 2.88% for a home 30 year home mortgage loan, they aren’t going to pay you much for your cash.
Remember also, that recently given stimulus money was just printed paper and the more of that there is, the less valuable the dollar is and that affects the entire world monetary system.
In the short term, the best anyone can hope for now in real dollars is to break even after taxes. That is unless you bought a whole bunch of gold fifteen years ago. If you did, you’re sitting in tall cotton.