Your Piggy Bank Is Happy: Savings Rate At 14-Year High

Americans took their cost of living raises and stuck them in their piggy banks, says the Commerce Department, pushing the savings rate to a 14-year high. Not long ago we had a savings rate of 0.1% — now it has skyrocketed to 5%.

From the 1950s to the 1980s consumers saved about 9% of their income, says MarketWatch. Are we headed back to those levels?

Are you saving more? If so, why?

Savings rate rises to 14-year high in January [MarketWatch]


Edit Your Comment

  1. Applekid ┬──┬ ノ( ゜-゜ノ) says:

    I’ve never had a poll make my laugh as much as this one.

    “LOL, I’m Not Paying My Mortgage”


  2. noone1569 says:

    Woo, not paying bills = savings!

  3. Oranges w/ Cheese says:

    I’m putting an obscene amount of money into my savings, but it isn’t really affecting my spending *too* much. Thus I’m still freaking out at the end of the month: WTF did my money go!!??

    My checking account is steadily getting smaller whilst my savings gets bigger, pretty much.

    • snapdoodle says:

      @Oranges w/ Cheese:

      I don’t think it counts as saving just because the account is called a “savings account”.

      • GildaKorn says:

        Thankfully it does count as savings. Savings is “Personal income less current taxes less personal outlays.” Your income, post-tax, that you don’t spend.

      • Oranges w/ Cheese says:

        @snapdoodle: Well, yeah. But that’s the account, as a rule, I DO NOT touch.

        • Cat_In_A_Hat says:

          @Oranges w/ Cheese: Same here. My checking account seems to shrink every month while my savings grows. At 23 I think I’m doing a pretty good job at learning how to save successfully. I have 3 savings account in total. A CD=emergency fund, a “savings” linked to my checking account=overflow for when I go over my monthly spending plan, and a real savings account at a bank separate from my checking account and checkcard which money automatically deducted from my paycheck goes into and never comes out. I also put money away each month into a Roth IRA (right now known as the toilet) as retirement savings until I find a full time job with benefits.

    • huadpe says:

      @Oranges w/ Cheese: Um, savings is the amount of money you make, minus the amount of money you spend. Doesn’t matter which account its in.

  4. Islandkiwi says:

    My savings is with ING Direct, buth they’ve been dropping their interest rate every month. Down to 1.835 now.

    Now that’s still amazing compared to my local bank, but anyone have a better place to stash savings?

    • EarlNowak says:

      @Islandkiwi: []

      Look at reward checking accounts if you’re willing to do a little extra footwork each month for a much better rate. Otherwise, take your pick of online savings accounts.

    • probablykate says:

      @Islandkiwi: I use FNBO Direct. Their rate has been dropping too but it’s currently 2.40% and used to be a lot higher.

    • c_c says:

      Yea that last ING rate cut hurt, it was right after I put my big fat tax refund in the account. Oh well, better than if it was in the same mutual funds that my IRA is in… ouch.

    • Saboth says:


      I used to like putting money in with paypal’s money market. It was almost 5% at one time, now it’s almost 0.

    • engstewart says:

      @Islandkiwi: 2.60% at

    • Rectilinear Propagation says:

      @Islandkiwi: I second the suggestion for a checking account that has interest. There’s a small local bank that has an account with interest higher than ING Direct’s current rate.

      I figure since it’s for savings it doesn’t have to be an account where I can hit any ATM in the country without fees. That’d be nice but it’s not necessary since I’m not withdrawing from it regularly.

    • shirkitraven says:

      @Islandkiwi: I use it’s where I shift all my spare cash. My checking account doesn’t earn interest so I keep the minimum in it since I’m moving money all the time.

    • Anonymous says:

      @Islandkiwi: Capital one offers 2.2% if you have more that 10,000 in the account. If not a dollar savings account from Emigrant Direct offers 2.65% but you need a $1000 to open.

      you should check out , they constantly update you with savings and credit rates in comparison with your current accounts.

    • Anonymous says:

      @Islandkiwi: Capital one offers 2.2% if you have more that 10,000 in the account. If not a dollar savings account from Emigrant Direct offers 2.65% but you need a $1000 to open.

      you should check out , they constantly update you with savings and credit rates in comparison with your current accounts.

    • supercereal says:

      @Islandkiwi: In short, you’re not going to get a stellar rate anywhere. For most people, that extra 0.2% that comes with rate chasing won’t make a real difference. I don’t think it’s worth the trouble of putting so much effort into changing banks (considering you already have a high yield savings) for an extra couple of bucks at the end of the year.

    • grumpygirl says:

      @Islandkiwi: Try Smartypig. []

    • TreyWaters says:

      @Islandkiwi: My CU has a checking account with 5% interest and no minimum limit. The only “catch” is that you have to make 12 Visa Debit card purchases per month to get the 5% for that month. Pay a few bills and get a few candy bars, and you’re set.

  5. Jessica Schwartz says:

    I have direct deposit set to automatically deposit 40% into savings. Have for about a year. We get really low on funds (especially after rent, like less than $100 some months) but still make it. We pretend the $$ in the savings account doesn’t exist and it makes us make better decisions about where we’re spending our money.

  6. t-r0y says:

    Option #5: Because I’m gonna have to pay some deadbeats mortgage.

    • Balfegor says:

      @t-r0y: And how! You forgot you’re also going to be stuck paying for bailouts of corporate failures (GM, Chrysler, etc.) and interest on the government’s trillion, two trillion or whatever of “stimulus” and other new spending. This is going to hurt for a long time.

    • gStein_*|bringing starpipe back|* says:

      @t-r0y: if you don’t have any money, you can’t pay for his mortgage

    • oneliketadow says:

      @t-r0y: So true. And for some Wall St. deadbeat’s expensive Vegas junket too.

  7. Yossarian says:

    My piggy bank is very sad indeed at current interest rates for online savings, CDs, and money market funds.

    I’m saving/investing the same amount as usual.

    • jeffbone says:

      @Yossarian: I feel the same way. My ING account is down to 1.85%, and even my credit unions are paying 1.0% or less on regular savings. 0.25% on checking barely qualifies as interest at the balances I typically carry in such accounts.

      I guess this is the inevitable result of the Fed pushing down rates, combined with the ongoing flight from equities. IANA economist or investment guru, however, so maybe it’s just due to Solar Cycle 24.

  8. JGKojak says:

    Uh-oh- the Wall Streeters won’t be happy with all of us actually SAVING our own money.

    I find it amusing that the same people who get bent out of shape over marginal tax increases seem to believe they own the right to everyone’s extra money- and when people don’t invest, they act like its treasonous. Given the way these crooks have managed the financial industry, its lucky we haven’t had a run on investments.

    • Balfegor says:

      @JGKojak: “Given the way these crooks have managed the financial industry, its lucky we haven’t had a run on investments.”

      Uh, we have. That’s why the Dow just dropped below 7,000 for the first time since 1997. Yes, a lot of this is just the gross incompetence on display in Washington at the moment, but that’s not the only reason investors are cashing out all their investments.

  9. zarex42 says:

    Duh, people are too afraid of putting money in the markets, so they’re putting it in the bank, instead. This shouldn’t be cause for celebration. Quite the contrary.

  10. Hoss says:

    I pretty sure “savings” is the distance between current income and current spending So paying down debt = savings

  11. MsClear says:

    I’ve been socking money away much more seriously since September. Got to Feb and realized that I was saving around 8% of my net pay. Realized that I might as well up that to 10%. So now I’m saving 10% of my net pay just in case.

  12. cynical_bastard says:

    What is a cost of living raise?

    • failurate says:

      @cynical_bastard: In times like this, companies that are not giving out raises should hand out pamphlets or hold seminars on how to effectively reduce your quality of life to fit your inflation reduced income.

    • Rectilinear Propagation says:

      @cynical_bastard: It’s when they only raise your pay enough to match the rate of inflation. It’s an increase that’s supposed to account for the rising cost of what you already pay for but the increase is not enough for you to pay for anything extra.

  13. ponycyndi says:

    I’m working more AND buying less crap. TWO votes FTW!

  14. Cheng-Jih Chen says:

    Some large fraction of the recession is caused by the dramatic shift in a basically zero personal savings rate to a 5% one, in a little over 18 months. That’s more than $500 billion in economic adjustments that have to happen in a very short time frame. Add in the fact that our financial system — which is the channel through which savings are translated into investments and current consumption — is dysfunctional, and you have a Keynsian “paradox of thrift”. Roughly, $500B is around 3% of GDP, so that’s probably the ballpark figure for the reduction on aggregate demand.

    Over the long term, this is a good and necessary change, but we’re going to have a lot of short term dislocation.

    • Decius says:

      @Cheng-Jih Chen:
      You are mistaken if you think because you put money into your savings account you remove it from the economy – the opposite is true: The reason why you get 2-3 % interest is because the bank uses the money to lend it with 5-8 % interest to other people/companies.

      The problem isn’t that there isn’t enough money, the problem is that banks don’t lend money to others with enough volume, something 5 % more or less saving by the consumer can’t and doesn’t influence.

      Of course now you could say that the money saved would otherwise go into the stock exchange – but with a Dow dropping below 7000 today I rather doubt this and I pity the suckers who thought they could time the market last month or even last year because “it has hit bottom now”.

      • Cheng-Jih Chen says:


        Actually, that’s my general point: the link between savings and investment is broken because the financial system is currently dysfunctional, and an increase in savings becomes demand destruction.

        I think the Keynesian argument is that the link between savings and investment is generally very weak (so we have a paradox of thrift and a decline in aggregate demand), whereas the counterargument is that the link is generally very strong (in which case, additional savings would be quickly invested and would maintain aggregate demand). Right now, with the problems in the financial system, we’re going to be closer to the Keynesian argument than not. Whether Keynesian remedies would work in a post-industrial economy is a different question.

  15. says:

    What is this “Raise” you speak of at all, let alone a cost of living…My wages have been frozen for all of 2009

    • Cat_In_A_Hat says: Some employers, like mine, give you a cost of living raise each year to offset inflation prices and to keep up with the increasing costs associated with the city you live in. Ours is around 3.5%. Not much to get too excited about, but it helps out a bit.

      • Saboth says:


        My employer usually does that too, but they have been greedy bastards the past few years. They recently cut their 401k contribution from 5% matching to 3%. They laid off a few people, and they have one of the worst health insurance plans that is legally available. So you’d think they were doing poorly in this economy? Nope, they’ve steadily made 1-2 million more every year for the past 5-6 years. Our costs remain the same (mostly), and they are making millions more. Then they use the economy as an excuse to cut costs further. Seems the more they make, the greedier they are, and don’t realize it is the hard work of their employees getting them there.

    • ajlei says: I got a raise year because of Oregon’s minimum wage going up. I wasn’t making minimum wage before and I still would’ve been making somewhat more than the new minimum wage even if I hadn’t gotten a raise, but hey, I’m not complaining about any kind of raise, considering our merit-based raises have been stopped until at least 2010. :/

  16. Jubilance22 says:

    I’ve been socking away money instead of buying crap. I just got my annual raise (crappy compared to last years raise) and pretty much its all going into my savings account.

  17. wardawg says:

    Lack of sleep means I read this as interest on savings accounts is up to 5%, which made me happy and incredibly confused at the same time.

    • ajlei says:

      @wardawg: I read it that way at first and my first thought was “hey! time to get a new savings account!” Alas.. it was not to be.

  18. DrGirlfriend says:

    We’re in savings overdrive right now. Not just to sock away money for emergencies and such, but also putting together a down payment for a house (we are hoping to be ready soon – sometime this month my department may get hit with layoffs, and my husband just came out of a layoff as well so we are sitting tight for now). It has indeed made a dent in our disposable income, but hopefully we’ll be able to put some of that cash back in circulation soon if all goes well.

  19. Jesse says:

    People are saving money because the current thought is that prices will still decline coupled with tight credit markets.

    That’s exactly what happened in Japan during the lost decade.

    • jhwnissan says:

      @Jesse: exactly.. people forget the depression in the 80’s but we pulled out of that because of incentives such as tax cuts and whatnot. freedom to make a decision and succeed or fail was a great thing.

  20. Starfury says:

    We fell into the “Where is all our $$$ going?” group. We took a look at the CC bill and made some changes in our shopping habits and the first month cut the bill by 1/3. My wife’s paycheck (part time work) has half into savings account we can’t easily access; I’m putting a bit of mine away each month also; but that’s so I can build a new computer this year to replace the aging desktops I have.

  21. Eyebrows McGee (now with double the baby!) says:

    Combo of “less crap” and “panic.” Although my panic is more personal circumstances than the general economy. I keep some nonspecific malaise handy for that.

  22. silversilver says:

    Didn’t save on purpose because my bills are too high to make that possible (other than putting 2% into 401k), but got a nice $1,800 tax refund that saved for me. Used that to cut my credit card debt in half.

  23. c_c says:

    Too bad they keep dropping my ING savings rate… this time down to 1.85%. I remember the glory days when it was 4+%.

    • forgottenpassword says:


      Ing has consistantly disappointed me ever since they decided to focus more on mortgage loans than savings. I dropped them a long time ago.

      Try []

      There are also banks that have amazing interest checking rates (I’m talking almost 6%!).

      Check here for them… []

      As soon as my next cd expires… I will be moving my money to a high yield checking account.

  24. jimmy37 says:

    Sorry, but the savings rate rate numbers have always been and are still BS. I have always “saved” my money. But “saved” that money and invested in the stock market, which I am still doing. Because the market has tanked, these “new” savers are now “saving” their money in bonds, instead of stocks, so what is the difference? I want to see total consumer indebtedness go down, then I’ll know that the savings rates are for real.

    • orlo says:

      @jimmy37: Good point. And since inflation will soon be quite painful, the savings rate in real money is probably actually lower.

  25. forgottenpassword says:

    I put most of my savings into a 2 year cd making nearly 4% (3.92%) when consumerist warned that interest rates were about to drop. Not two weeks later it did.

  26. Squeezer99 says:

    what cost of living raise?

  27. theblackdog says:

    I set up my savings account to automatically pull money every week from my checking account, so the money will start being saved. Once I pay off my credit cards this year, then all the money I was paying towards them will start going straight into savings as well.

    That right now is my emergency fund as well. The time or two I have been caught short right after rent is due (yes it’s my own fault for not tracking spending closely) whatever money I have had to pull from savings to cover expenses is immediately replaced when I get paid again. For once my savings is actually growing because I am paying more attention.

  28. maztec says:

    What bank are you getting these rates at on a standard account? I can get it for the first $500-$1500, but not beyond that…

  29. ninjatoddler says:

    I’m actually spending more but making much more so that equates to saving more.

  30. kyle4 says:

    I realized I was just spending money on things that weren’t needed. With the poor amount of hours I’ve been receiving and the need to pay for schooling, it would be a better idea to save it all.

  31. cupcake_ninja says:

    People still get cost of living raises?!?!
    And here I thought my piggy bank was getting fat off of the $13/wk back from Obama…

  32. SonicPhoenix says:

    My wife and I have saved about 30-45% of our combined income since we started working which was about 5 years ago. 15% goes to 401k, 15% goes to a Roth IRA and 15% goes to the bank and/or brokerage account to save for a down payment on a house.

    I don’t really see any reason to change that unless our situation changes drastically, such as a layoff or if we actually pull the trigger and buy a house which is unlikely since we’re not crazy about the area in which we currently reside.