Learning When to Take Advantage of Higher Rates
If you’re thinking about saving money, good for you! A few dollars here and there will certainly add up.
In the old days, people would store cash under their mattresses to ensure safety and security. But there’s more to it than that, and certainly, better options are available when it comes to earning interest on your savings.
Should you use a Savings or Shares account, or should you invest in a money market account? How about CD’s or Share Certificates? We wrote a blog article about this earlier, and here is a link.
You may also be wondering about interest rates. What is a good rate to look for when you want to save money? It’s an important question, and the answer is always changing. That’s because our economy is always changing, for better or for worse.
For instance, at the time this article was created, the Ashland Community Credit Union is offering up to 5.05% APY on CD share certificates, and rates as high as 2.4% APY on Money Market Accounts. But is that good? Should you take us up on it?
Here’s what you need to know to make an informed choice.
Historical Overview
Historically, savings rates have fluctuated significantly, influenced by various economic factors. In the early 20th century, particularly during the Great Depression, savings rates were relatively high as people focused on financial security amidst economic instability.
After World War II, they decreased to between 1-2% as people were spending instead of saving. Rates rose in the ‘70s into the early ’80s with rates as high as and sometimes exceeding 8-10% due to high inflation and unemployment, then fell again in the ’80s and ’90s to around 2-4% as consumer confidence soared.
Recent Trends
In the early 2000s, savings rates hit historically low levels, from .1 -.5%, driven by easy credit and a focus on consumption.
The 2008 financial crisis and the recent COVID-19 pandemic further accelerated this trend. Savings rates during the pandemic rarely rose above .5%.
Current Conditions
Rates are on the rise again! You can thank inflation and rising interest rates. Some high-yield savings accounts are offering rates between 4-5%. This brings us full circle to the rates being offered now at the Ashland Community Credit Union.
At the time of this publication, CD savings rates are as high as 5.05% APY, and Money Market rates are as high as 2.4% APY. Click here for Ashland Community Credit Union's current savings rates.
The bottom line is it is always a good time to save money. But some times are better than others. If you can find savings rates above 2% APY for Money market accounts and around 5% APY or higher for CD savings accounts, it makes sense to look closely and make good decisions.
No matter what you decide, remember, that nothing lasts forever. The only constant…is change.
