I have been writing a lot lately about saving money, and naturally I’ve been thinking about great places to store that money. In talking to some folks who are more experienced in saving money than I, I was urged to take a look at the latest CD rates, and was pleasantly surprised with what I saw.
After the economy crashed in 2008 and the Federal Reserve system began pushing interest rates into the gutter to encourage investing in equities, high interest savings accounts and certificates of deposit became the red-headed stepchildren of the personal finance world (my apologies to red-headed stepchildren). Many folks were rightly dismayed that the federal government chose as their “fix” for the economy a policy path that punishes savers, otherwise known as people who have their sh*t together and deserve none of the blame for our current financial malaise.
Actually I take that back, because in a strangely perverted way, the people doing the right thing are partly to blame for our sluggish recovery. Businesses have money, they are just hoarding it and paying off bills. Many consumers have savings, but they are hoarding it and not blowing it on consumer goods. In the twisted economy we have built, progress and growth is dependent on borrowing and bad choices.
So back to the CD rates. When I checked them, I was surprised to see some approaching 2 percent, albeit for larger minimum balances like $2,500. But let's face it, many of the people using certificates of deposit have large balances to protect, and they are often used by institutions like school districts that have large reserve funds. For these types of savers, a minimum balance is not an impediment. I say it should be a goal, part of the process of maturing financially.
By paying off debt and amassing savings, you no longer have to hesitate when the best choice says “$2,500 minimum” “10,000 minimum.” This just means you are part of a special club of winners.
Is the US economy divisive? Yes, intentionally so. That’s what capitalism is, dividing the society into haves and have nots – winners and losers. The sooner you learn the rules of the game, the sooner you can start winning.