Why isn't the "credit crunch" pushing up interest rates on savings accounts and money market accounts?

Question

If banks are having trouble finding money to loan out, shouldn't they be offering higher interest rates on their savings accounts to attract more money? Instead, interest rates have gone down recently. Does the Fed's rate cut overwhelm any extra money they might have gotten from savings accounts?

If the banks can "find all the money they want", why is there a credit crunch at all?

Answer 1

The banks can find all the money they want. They can borrow unlimited amounts from the Fed, and at a recently cut rate, as you note. There problem is not finding money to loan; their problem is that the borrowers do not pay them back.

Answer 2

My conjecture is that the fed cut rates only affect the banks, and stuff that is short term such as credit cards and personal loans. Chances are the bigger the bank the lower the interest return is, at smaller banks such as farmington savings bank which really isn't that big at all people will get a bigger return compared to bank of america which has thousands of CDs that people can take out at a low interest rate.
Now the morgage crisis granted what people might say about the interest rate cut affecting the ARMS that were taken out, aren't affected in anyway by the cut at all. Long terms such as morgages are only affected by the bonds brought, and since people want to see a bigger return on the bonds then chances are the people buying them are turning a passing eye to um. Because american currentcey is not as valued as it used to be. Hell the canadian currency has more value than american money.

Answer 3

Open an on-line account with an internet bank like ING or Emigrant Direct. You'll get a 4.5%-5% return on a money market account with no minimum balance. As a minor, vesting is your most important issue. Until you reach the age of majority, you'll have to have an adult or trust act on your behalf. For example, you can have your parents on the account jointly with you, or you can have the account titled in your parents name FBO (for the benefit of) your name (the money goes to you automatically if they die). But it doesn't have to specifically be a "minor's account". Alternately, if a trust is ever set up with you as the beneficiary, an adult trustee will be in charge of the account for you - a trust can be set up to have its holdings released to you once you turn 18. Generally, the laws simply will not let you enter into a contract on your own until you turn 18, including opening your own bank account. Keep in mind that any adult can open an account jointly with you and act on your behalf - it doesn't have to be your parents. But I'd be very cautious to make sure it's somebody you can totally trust. Good luck, and congratulations on getting an early start.