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Home > Will we have to pay banks to hold our money?

Will we have to pay banks to hold our money?

December 19th, 2008 at 09:56 pm

Today I called a bank to check on CD rates, and they said "no rates for new money ... we're only quoting on rollover CDs." First time I have heard that! I guess if they can borrow from the Fed for free, they don't need my money!

It's getting hard to find places to park short-term cash and earn a bit of interest on it. Shoud I be grateful that I don't yet have to PAY a bank to hold my money for me?

17 Responses to “Will we have to pay banks to hold our money?”

  1. baselle Says:

    Wow. Zirp is causing a ton of weird effects. How about this one on ING as of 12/19/2008...

    6 month CD - 2.5%
    9 month CD - 2.75%
    Orange Savings (the regular one, take your money out at any time) - 2.75%.

  2. Petunia Says:

    Wow. Just. . . wow. I think I'll call my credit union and see if they are doing the same.

  3. fern Says:

    www.dollarsavingsdirect.ocm pays 4% on Money markets with $1,000 minimum deposit. FDIC-insured.

  4. disneysteve Says:

    baselle and fern, keep in mind that the CD rate is fixed for the term of the CD. The savings rate is not. With the Fed rate down to 0%, I suspect we'll see those money market rates drop. It might not be a bad time to lock in a fixed rate on money you don't need for a little while.

    scfr, sadly lots of people already do pay their banks to hold their money. They do it in the form of fees. They pay ATM fees, under the limit fees, overdraft fees, bounced check fees and other fees that often amount to more than they collect in interest.

  5. frugaltexan75 Says:

    I know what you're saying. I keep checking ING's interest to see if they've dropped it yet. I'm kind of kicking myself that I didn't take HSBC up on their 4% CD offer from a few months ago. I could've put maybe half my emergency fund in there.

    If rates drop too much more, it almost won't be worth it to keep money in the bank, other than a 'safe' place to 'store' it.

  6. asmom Says:

    Oh good grief! I'm glad I locked in a CD for my daughter for the year at 4% but sad that I didn't have enough to do it for myself. Sheesh....

  7. monkeymama Says:


  8. scfr Says:

    What I ended up doing was putting the money in my Wachovia MMA. Back when they were having trouble (before the Citi & Wells Fargo brouhaha) they agreed to lock my APY at 3.75%, if I would deposit some new money, through the middle of January. (While it's unusual, you sometimes can get a savings rate fixed for a period of time. Obviously that's going to be with a bank that really needs the $$$.)

    Before I headed over to Wachovia to deposit the money, DH & I started joking that when I got there with the deposit they might put their hands up and say "No, no thank you!" I mean, since the rate is locked they have to pay it to me, but they probably don't want to!

    My solution was a very short-term fix ... The question I now must answer is, do I lock in a short-term CD now at less than 3.75%, or do I hope that rates hold steady until the middle of January?

  9. creditcardfree Says:

    Hmm...I hadn't thought of that either. So, I may need to look at putting some of our EF money in a CD rather than our money market that is paying 3.25%? I feel pretty confident we won't need the money...and any penalty would be worth it if we did.

  10. disneysteve Says:

    Keep in mind that T-bills sold last week for a 0% yield. They actually sold bonds that pay no interest at all.

  11. Amber Says:

    It's tough banks are reducing interest right and left. I need to check with my CU as well

  12. creditcardfree Says:

    Steve, how does that work? If you buy a bond with a 0% yield you pay the full value and get no interest? Why would you do that?

  13. aevans1206 Says:

    Creditcardfree: because the government is a very safe investment, good place to park your money for awhile. At least you get it all back. Many who invest in the stock market are buying up those treasury bonds for safety. I'm an NPR listener and proud Smile

  14. disneysteve Says:

    ccf, here's the thread that talked about it:

    Apparently, it wasn't individuals buying them but rather mutual funds, pension managers, etc. who had to park their cash somewhere safe. I don't know why they couldn't just stick it in a safe and save themselves the trouble.

  15. creditcardfree Says:

    aevans1206 and steve...I did finally figure this out. That it was for safety purposes! Never thought I'd hear of something like this. Makes some sense. I'm staying in the market...I guess this means I like some risk.

  16. baselle Says:

    Re: t-bills at 0%. There are a lot of international buyers of these. Oddly enough, the US dollar is relatively strong, but weakening a bit in the last few weeks. Often an international buyer thinks, "0% in T-bills is bad, but being in the US dollar is far safer when compared to my own currency."

  17. CD Rates Blog Says:

    Because the banks can get money from the Fed and wholesale at a very low cost, savings rates and CD rates will continue to come down.

    Many banks do offer a nice yield on the CDs vs. Savings Rates and if you don't need the funds, put it in a CD.

    Emergency funds should be kept in savings. Funds that aren't needed for a while, but you can't really afford to risk, should be put in CDs.

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