51M. As a child I had a children’s saving account with compound interest. My $100 went up to just below $200 in around 4 – 5 years. That seems like peanuts, but to a kid that was a lot.As a young adult, in the mid 1990s, I remember my older colleagues were talking seriously about CD interest rates to put away for up to five years, at 6%.
Now, in 2024, with the major banks, a one-year CD from Bank of America is 0.03%. Maximum rates for 5 years is 2.5% at Chase, no matter how much money you put away. Savings accounts compound interest rates are 0.01%, max, IF you maintain at least $10,000 in the account.Yet interest rates for a housing loan are at 7% and putting housing purchases out of reach. How can the banks do this?
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In: Economics
A lot of people have answered the core question quite well so I won’t bother going into the details as to the why. All I can say is that while it is true that banks do indeed not offer good rates any more, there are still some great options out there that can offer as high as 5% for a HYSA and as high as 10% in the form of long term investments. I know people recoil at the mention of the word investment but it’s really the only proper way to actually get returns on your money and not all of it is a gamble as many people think. CDs are simply just not worth it any more. Too many terms and restrictions for too little returns.
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