Why Savings Account Rates Suck Right Now

You may have noticed it’s dang hard to get a good rate for saving money right now. Used to be you could get an online savings account with 5%, no problem. Now if you can get in the upper 1% you’re doing pretty good. So what’s the dilly?

New York Times’ Ron Leiber takes a look and lists seven reasons. The most important: banks are taking a bath on their loan portfolios and buying bonds instead, leaving a lot less cash available to lure in more savings capital.

This also means that savvy penny pinchers who put chunks in online savings accounts during the boom years could be in store for a comeuppance. If they also sneered at homeowners suckered into sub-prime loans, they themselves were also benefiting from some of the same gravy sloughed off by the fraud-driven lending bubble.

Why Savings Account Rates Are So Pathetic [NYT]