Personal Savings Rate Increases to 2.6 Percent in February
The personal savings rate increased in the U.S. Department of Commerce Bureau of Economic Analysis' Personal Income and Outlays for February 2013. The savings rate increased from 2.2 percent in January 2013 to 2.6 percent in February 2013. While the rate in February is higher, January is still down from 6.5 percent in December 2012.
The U.S. personal savings rate, which shouldn't be confused with savings account rates, is the rate at which Americans are saving. The rate is calculated by taking personal income minus disposable personal income (DPI). Actual savings account interest rates are much lower than 2.6 percent these days - right now the best savings rates are at 1.00 percent.
Over the past several decades Americans, have been saving less and spending more by relying on credit cards to buy things now and pay for them later. Another factor that has impacted the rate at which we save is interest rates. Since the financial crisis and Great Recession, interest rates have been declining.
Savings rates, CD rates, money market rates, and all deposit rates along with bond yields have moved lower and lower. The Federal Deposit Insurance Corporation (FDIC) publishes a weekly National Average Rates and Rate Cap Survey. In the most recent survey released on March 25, 2013, the national average savings account rate is a measly 0.07 percent.
Think jumbo savings rates are higher? Nope. The national average jumbo savings rate in the most recent survey is also at 0.07 percent. Money market rates are averaging a little higher but are still pathetic at 0.10 percent. Average jumbo money market rates are just a little higher at 0.16 percent.
With average rates being so low, no wonder the personal savings rate is only at 2.6 percent. What incentive do you have to save when most banks are offering extremely low deposit rates? In fact, the rate of inflation is higher than the national average savings rate and money market rate. These rates are average rates so you can find banks offering rates much higher than the averages.
Right now the highest savings account rates are from CIT Bank and Barclays Bank at 1.00 percent. We also have a bank, Everbank, offering a 6 month promo money market rates at 1.25 percent. The highest CD rates on our rate tables are also many times the national average. This week's FDIC survey has average 12 month CD rates at 0.22 percent but on our 12 month rate table, we have rates at 1.04 percent with an APY of 1.05 percent.
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