Hit below the belt...smack dab in my wallet!
By thorgrym
@thorgrym (675)
United States
February 19, 2009 8:39am CST
Several years ago, I established a savings account with an online bank. While this bank does have brick-and-mortar branches, there are none local to me. I wanted an account that I could use to save about $5.00 per week from my paycheck (when I was able to work) in a bank that was not easily accessible to me. This way, I would be less likely to spend the money that I had saved. Overall, my plan was working and I was very satisfied with the service and interest rate that I was getting from my internet savings account. Soon, I found that I had over $500.00 saved in my account without even really knowing it. The $5.00 deposit was direct-deposited to the account from my paycheck so I never really noticed the transfer.
I decided to open a CD (certificate of deposit) with this bank as they had a very low minimum balance but offered and even better interest rate for my savings. I selected the term from the list of options that offered the best rate, transferred the money from my savings account, and mostly forgot about it. After all, with a CD, there are penalties for early withdrawal, so if it wasn't on my mind that I had that money, I was less likely to touch it.
Well, fast-forward to today... I still have the savings account and the CD (rolled over several times since the day I first opened it) in addition to a couple of custodial accounts for my kids with this same bank. I am still very pleased with their service. However, my CD rolled over today and I received a notification email. So, I logged in to my account to check on things to make sure everything was as it should be. I was 
shocked to discover that the interest rate on my newly rolled over CD had dropped to only 2.25%!!! OUCH!
I realize that this is the fault of the poor state of the economy, not the fault of the bank, but wow! Up until yesterday when the CD matured, I had been earning almost 6% interest on my money. I am almost tempted to adopt the practices of those that lived during the Great Depression and start hiding my money in my mattress!
shocked to discover that the interest rate on my newly rolled over CD had dropped to only 2.25%!!! OUCH!
I realize that this is the fault of the poor state of the economy, not the fault of the bank, but wow! Up until yesterday when the CD matured, I had been earning almost 6% interest on my money. I am almost tempted to adopt the practices of those that lived during the Great Depression and start hiding my money in my mattress!3 people like this
5 responses
@ladym33 (10979)
• United States
9 Mar 09
I wish our investments had only experienced a interest rate drop. Unfortunately we have most of our money in mutual funds. Our retirement accounts, our kids college accounts and even some savings. Because of this economy we have lost thousands and thousands, and thousands of dollars. We have pretty much lost every scent we earned on the investments, and even our principles are being eaten at. We have lost money that we have been saving for 19 years, all in less than a years time. This economy is very scary. They keep saying if we just leave the investments alone eventually they will come back, and we will do well because we are buying in so low right now, but all I see is the money going down, down, and down. I am so scared. I don't see things turning around in this economy they only seem to be getting worse. This whole thing upsets and terifies me to no end.
1 person likes this
@GardenGerty (160883)
• United States
26 Apr 09
I need to look into buying in to something, since for the first time in years I have a little extra to do so with. Luck to all of us.
@thorgrym (675)
• United States
9 Mar 09
I didn't take it as being insensitive at all. I understand the concerns completely. My investments have also suffered from the economy. The CD interest rate was just the 'last straw' so to speak.
Continuing to invest in these times definitely takes dollar cost averaging to new meaning, but the question is which investments to make. Mutual funds have the benefit of being diversified, so even though they have taken a major hit recently it is still a good investment vehicle.
Things will certainly get worse before they get better.
1 person likes this
@srijshm (1165)
• India
8 Mar 09
Its surprising that lending rates never go down in recession & it's only the deposit interest that keeps on reducing.
In India it was found that gold is best investment one could make.
Well......... not actually real estate was the top followed by gold.but not everyone can invest in real estate. Gold coins stacked under the mattress would have surely gotten you more than 2.5%.
@thorgrym (675)
• United States
9 Mar 09
Yeah, they charge us more to borrow money and 'pay' us less to lend it to them...which is really what we are doing by depositing money with the banks.
Gold is always a sound investment - though really uncomfortable when stacked under my mattress!
1 person likes this
@GardenGerty (160883)
• United States
26 Apr 09
I have $500 in a jar right now. Of course it is for a certain purpose, and any money that goes in the bank hubby kind of uses without knowing where. Mostly on cars or on our online businesses. That is what happened to the tax return. This is money for a trip next month to see my daughter and her family, so it will have some more pretty soon. We have used it for some things like paying for emergency stuff at the house, but for me, again, it is out of sight out of mind. Hubby knows it is there, but leaves his hands off. I really would like to find some place that would pay me decent interest. My PayPal used to, and I used it the way you are using your CD. I have some money sitting there, but the interest has significantly dropped. I used to get nearly 7%.
@rjl1989 (190)
•
18 Oct 09
to be honest, 2.25% is not too bad at the moment, it's still 2% above base rate, many savings accounts pay 0.1%. When you were getting 6%, that was probably still 2% above base rate. And remember inflation is lower now so in real terms the difference is not as much.
Even though it was posted as a joke, in case anyone reading didn't get that, i wouldn't advise the mattress, it pays 0% interest and isn't safe, if you had a burglar or a fire it could be gone.
@thorgrym (675)
• United States
18 Oct 09
'At the moment' the CD interest rate is only 1.65%. My original post was 9 months ago, and things have improved slightly. For some reason, the better interest rates offered by this particular bank are on the shorter term CD's (6 mo., 9 mo., 1 yr.), so this CD in question has rolled over again since my original post - this time with a rate increase! I also selected the shorter term option in the hopes that, should the rates bounce back, I wouldn't be locked in to the lower rate for too long a period of time. It paid off in this case!
Even with rates lower than this bank normally offers, they are still better than all of the banks local to me.
Thanks for your response!
