It seems that big banks have gotten stingy with the interest rates offered on savings accounts these days. There was a time when they felt the need to lure in new deposits with the promise of higher rates, but it seems the promotion party is over.  Not only do banks no longer feel the need to solicit new clients, but they’ve also recognized that losing money by paying higher interest rates on savings isn’t a smart move. Currently, interest rates average about 3.60% according to Motley Fool. But interest rates are affected by the Federal Reserve and change often. 

When the federal fund rate decreases, so do interest rates at banks. When the federal fund rate increases, so do interest rates at banks. Banks need the interest rates on accounts to be lower than the interest rates on the money they lend out to continue to make a profit. 

But traditional savings accounts aren’t the only “rainy day” fund options available. Credit Karma shared a terrific article on alternatives to savings accounts that is worthy of a read. CDs, money market accounts, credit unions, and even online banks can offer a better return on cash than a brick-and-mortar bank. 

It’s important to save money so you can enjoy life and have greater security and peace of mind. But where you choose to save money is entirely up to you.