How will the Fed’s rate cut affect high yield savings accounts?
April 10, 2009 by How Savings Bonds Work
Filed under High Yield Investing
Can you answer hotrainrider’s question about Bonds?:
Today, Ben Bernanke announced that the Fed will cut a key interest rate. What effect, if any, will this have on high yield online savings accounts (like ING for example)? Will the accounts’ interest rates lower as well, will they rise, or will they stay the same? Will it have any effect at all?
Bonds Tips
Today, Ben Bernanke announced that the Fed will cut a key interest rate. What effect, if any, will this have on high yield online savings accounts (like ING for example)? Will the accounts’ interest rates lower as well, will they rise, or will they stay the same? Will it have any effect at all?
Bonds Tips
Bonds Feedback: First, this isn’t exactly true; there wasn’t an FOMC decision today. Bernanke just said some things which (strongly) suggested that the Fed was probably going to cut rates again.
ING cut their rates immediately — a friend of mine checked shortly after the announcement and saw the results reflected on their webpage. ING’s savings accounts are variable-rate, so this affects anyone with money in an account right now. Certificates of Deposit, on the other hand, have a fixed rate until maturity, so anyone with money already invested in a CD has locked in the rate they got beforehand.
Bonds Feedback: Normally you’ll find banks cut their rates when the Fed does, but in todays capital starved markets I think there will still be good finds out there in CD land as companies are forced to pay out higher rates to bring in more funds.
ps the FOMC doesn’t meet til Jan 30 so that is when the cut would happen.