Savings QoD: How much (in billions of dollars) are Americans losing by keeping their money in low-interest savings accounts?
Answer: $50 billion
Questions:
- Why do you think Americans leave their money in low-interest savings accounts when they could earn more by switching banks?
- Would your answer to the previous question change based on the amount of money you had in your savings account?
- Online banks tend to have the highest interest rates on savings accounts. Would you trust your money with an online bank?
Behind the numbers (CNBC):
Almost 70% of people earn less than 2% on their savings accounts, according to a recent survey by Bankrate. That includes 24% who earn no interest at all. The average savings account interest rate in the U.S. is 0.09%, according to the FDIC, and some of the country’s largest banks pay even less...
By keeping their money in low-rate accounts, Anand Talwar, a deposits and consumer strategy executive for Ally Bank, told CNBC that Americans are foregoing $50 billion of interest each year. “There is no excuse for not putting your hard-earned savings into a better-yielding account,” Greg McBride, chief financial analyst for Bankrate.com, said in a statement. “You’re preserving the buying power of your savings and not losing ground to inflation.”
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Your students will learn how to create a savings plan in this NGPF Case Study: Save Me!
About the Author
Tim Ranzetta
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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