Quote:
Originally Posted by peteshimmon
Absolute financial type deflection statement
seemingly with knowing brevity and gravitas
and complete you know what..in my well
informed opinion. I remember when the rate went
down half a percent in the nineties, so did
current account interest rates. Only these
rates were 1%. A law restricting minimum rates
to 1% is needed. And something to make the
blighters compete.
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Money Market rates are generally low because banks are running the risk that money market customers could walk in at any time and demand their deposits back. Sometimes they will offer premium rates on these accounts to attract more deposits if their reserve requirements aren't being met. Or they might just want to get more people in the door who may be interested in borrowing as well (customers with strong deposits tend to make decent credit risks).
If you want a higher rate of interest, agree to allow the bank to hold your funds for a longer period of time via a certificate of deposit. The longer you agree to leave it there, generally speaking - the higher your rate of return.
The fed won't set a minimum interest rate because at times they want to encourage people to spend rather then save in order to bolster the economy. If I've got $20,000 in savings and the rate drops to 0.10% - I just might be encouraged to go out and replace that old car (which we did this year because savings rates were low and borrowing rates were low). This type of consumer activity gets the economy moving. When the economy is rolling along, rates may increase so it doesn't over heat and crash at some point. I might be encouraged to pay off that car early and start building up savings again.