Grim Outlook for Bank Account, CD and Credit Card Holders
Economic news this week show a grim outlook for bank account, CD and credit card holders:
Average Interest Rate on Savings and CDs Falls to Below 1%: Lowest in a Decade
The San Francisco Chronicle and Bloomberg News announced yesterday that “the average interest on savings, checking, money market and certificate of deposit accounts fell to 0.99 percent in July, the first decline below 1 percent in a decade”.
Credit Card Rates Soar to Nine-Year High
Earlier in the week, the Wall Street Journal announced that the majority of credit card holders are seeing their rates go up to levels that hit nine-year high fueled by new rules limiting penalty fees. In the second quarter of 2010, the average interest rate on existing cards reached 14.7%, representing an increase from 13.1% a year earlier.
The author believes this is due to 2 major reasons: “The Credit Card Accountability Responsibility and Disclosure Act of 2009 has given card issuers less flexibility to raise interest rates as they wish. At the same time, issuers are still dealing with credit-card delinquencies that remain above historical levels.”
Read more: “Credit card rates climb” by Ruth Simon, Wall Street Journal.
Trend: Americans Are De-banking
Out of every crisis, there is always an opportunity to do things in better ways. Innovation seems to be enabling a customer trend of moving away from banks. In agreement with the The San Francisco Chronicle and Bloomberg News article, Fortune and CNN Money posted this morning that Americans are “de-banking” meaning that “everyone from consumers to some of the world’s largest companies are straying away from large financial institutions as sources of funding.”
Read more: “Are Americans de-banking?” by Nin-Hai Tseng, Fortune.
Friday, August 27th, 2010 at 8:07 am