Savings Account Rates Will Remain Low in 2012 Thanks to Slower GDP Growth
The dismal savings account rates we all have suffered with the past 4 years are so will remain low for the foreseeable future. The latest weak economic number that will keep savings interest rates down is 1st quarter GDP which came in at a weak 2.2%. A economy slowed from a growth rate of 3.0% in the 4th quarter of 2011.
GDP (Real gross domestic product), is the the output of goods and services produced by labor and property. The first quarter estimate of 2.2% is an advance estimate, we will have two more revisions before the final number comes in. Don't expect much of a change from the first number to the final number.
As the economy slows the rest of 2012 which the Federal Reserve said it will you can expect interest rates to remain low. This will put downward pressure on already low rates. Banks and credit unions will continue to lower savings rates and CD rates. The good news is mortgage rates will also remain low.
Speaking of savings account rates the best savings rates and money market account rates right now are under 1.00%. Ally Bank savings interest rates are at 0.84% and American Express savings rates are at 0.75%. You can find 1 year CD rates just above 1.00% like 1 year rates at Ally Bank which are at 1.04% APY.
I remember several years ago when the average savings account rate was around 5.00%. It would be nice to see savings interest rates at 5.00% but we probably won't for several more years. We have lived in a low inflation or deflationary environment for several years now and will continue to do so.
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