Moneyes wrote: It is a complicated mix, that's for sure. In all my years though, I have learned that it's easier to just accept what you don't like and move on. You cannot NOT play the financial game just because you may not like one aspect of it.

Very true, especially for everyday consumers.

It is a complicated mix, that's for sure. In all my years though, I have learned that it's easier to just accept what you don't like and move on. You cannot NOT play the financial game just because you may not like one aspect of it.

Moneyes wrote:

Pinky wrote: Interest rates are dependent on supply and demand - when economic growth is high, demand for money is high, so interest rates are pushed up. Government borrowing and fiscal deficit also affect interest rates- since the government is the biggest borrower in the debt market, the level of borrowing also determines the interest rates.

That is exactly why I was never a fan of the Government being involved in what interest rates do. Supply and demand is just the way it is, but to have an entity like the government also dictate what the rates are.........they should be out of that mix in my opinion. It just FEELS unconstitutional.

There is also a lot of market participants who are affecting the rate. You can see that in the yield curve.

Pinky wrote: Interest rates are dependent on supply and demand - when economic growth is high, demand for money is high, so interest rates are pushed up. Government borrowing and fiscal deficit also affect interest rates- since the government is the biggest borrower in the debt market, the level of borrowing also determines the interest rates.

That is exactly why I was never a fan of the Government being involved in what interest rates do. Supply and demand is just the way it is, but to have an entity like the government also dictate what the rates are.........they should be out of that mix in my opinion. It just FEELS unconstitutional.

Wanderer wrote: Remember there is an offset to earning higher interest, usually you will find the lending side has increased it's rates too. No free rides, lending has to generate revenue to pay higher interest on savings and the like.

Yeah, but........ The interest rate on savings right now is way lower than on loans. It's just frustrating to watch my money sit there with little growth month after month. I know it's better than nothing but still........

Wanderer wrote: Remember there is an offset to earning higher interest, usually you will find the lending side has increased it's rates too. No free rides, lending has to generate revenue to pay higher interest on savings and the like.

Absolutely. And so the question on if you helps/hurts you really depends on your situation. i.e. are you more of a saver or more of a borrower.

Remember there is an offset to earning higher interest, usually you will find the lending side has increased it's rates too. No free rides, lending has to generate revenue to pay higher interest on savings and the like.

Pinky wrote: Interest rates are dependent on supply and demand - when economic growth is high, demand for money is high, so interest rates are pushed up. Government borrowing and fiscal deficit also affect interest rates- since the government is the biggest borrower in the debt market, the level of borrowing also determines the interest rates.

Well said! Sometimes the government can be a little slow or too quick to change though!

Higher rates on savings would be welcome. I joined an online only bank many years ago because they were offering 3% interest. As my savings increased, I watched the rate drop and drop and drop to the current .75%. A few newer online banks are offering a slightly higher rate, but not enough to encourage me to switch just yet.

Interest rates are dependent on supply and demand - when economic growth is high, demand for money is high, so interest rates are pushed up. Government borrowing and fiscal deficit also affect interest rates- since the government is the biggest borrower in the debt market, the level of borrowing also determines the interest rates.

Joker wrote: I am afraid that the interest rate will go up and not just on savings accounts. This will exclude many from homes they want or need and I really dread that fact. In the past it has never stayed low and I really don't expect it now. Be careful is the best advice I can give you.

If interest rates are raised, they will be raised for everything including savings rates, CD rates, and interest rates on credit cards, mortgages etc. Both good and bad for every consumer.

I am afraid that the interest rate will go up and not just on savings accounts. This will exclude many from homes they want or need and I really dread that fact. In the past it has never stayed low and I really don't expect it now. Be careful is the best advice I can give you.

FrugalFran wrote: What do you consider to be a good return on CDs, Frank? I'm just curious because I was considering buying one or two, but the rates I have been seeing look pitiful to me. Am I expecting too much?

Well, to me its relative to what return I can get elsewhere. A 1-3% return isn't worth it to me b/c the majority of my investment horizon is so long term (30+ years). If you want 100% security/no risk/ and need the money in the near term (1-3 years), A CD is a viable and great option. Just for me, I would need 5-6% plus return.

What do you consider to be a good return on CDs, Frank? I'm just curious because I was considering buying one or two, but the rates I have been seeing look pitiful to me. Am I expecting too much?

I would expect 2-3 interest rate rises this year, but they will still be small. I don't think you will really get a good return on a CD until 2019 and on. That is assuming the economy holds up and continues to grow.