SALES, RENTALS & LAYAWAYS

PROTECTING EVERYTHING THAT HAS EVER BEEN OF VALUE TO YOU

Open 24/7/365

We Have A Life-Time Warranty /
Guarantee On All Products. (Includes Parts And Labor)

Bitcoin’s Historical Returns Look Very Attractive As Online Banks Lower Payouts On Savings Accounts (#GotBitcoin?)

Last month, the Ally Financial — winner of Money’s 2018 award for best online bank — sent an unusual message to its customers: Interest rates on its popular high-yield savings account would be going down. Bitcoin’s Historical Returns Look Very Attractive As Online Banks Lower Payouts On Savings Accounts (#GotBitcoin?)

Shortly afterwards Marcus, Goldman Sachs’s online bank, did the same.

That’s bad news for savers since those lenders, along with a handful of other fierce competitors, spent much of last year repeatedly raising rates, in a battle to win customers. The result was that, after years of stingy returns, rates on the most attractive high-yields savings accounts recently topped 2.4% in 2018, even beating the stock market. (The S&P 500, by contrast, lost 4.4% for 2018.)

What why the sudden turnaround? The answer has to do with the Federal Reserve which said earlier this year that it would be unlikely to raise rates further in 2019, and may in fact soon cut them.

Don’t despair, say experts. While savings account payouts may gradually come down, you’ll likely still be earning more than you were just a few years ago, and, with a little searching, you can find banks offering great deals.

Here’s What You Need To Know:

Why Rates Could Fall

For much of the past several years savers have had the wind at their backs. The Federal Reserve, which sets the interest rates most financial institutions follow when calculating what to offer their own customers, had been steadily raising its benchmark Fed Funds rate, as the U.S. economy grew stronger and stronger. In fact, after lowering rates to almost nil in the wake of the financial crisis, the Fed hiked its target rate nine times between December 2015 and December 2018.

So far this year, the Fed has opted to halt any further hikes and keep the federal funds rate steady at 2.5%, the level it’s been at since December 2018. And many experts predict the Fed will move to lower that rate this year, maybe as soon as this month, now that hiring appears to be slowing and Treasury bond yields are down.

Ally Financial was the first to react. On June 26, the bank cut its online savings rate to 2.1% from 2.2%, explaining: After a period of increases, interest rates are on the downswing and projected to fall further. These market conditions impact all kinds of things, from mortgages to CDs to savings accounts.”

Shortly after, Goldman Sachs dropped rates on its Marcus high-yield savings account to 2.15% from 2.25%. Goldman Sachs said in a statement: “rates on certain products change based on market conditions.”

Both banks remain among the top financial institutions offering the highest savings account yields on the market, according to an analysis by NerdWallet.

Why High-Yield Accounts Are Still A Good Deal

So far Ally and Goldman Sachs don’t yet reflect a broad trend, says Greg McBride, Bankrate’s chief financial analyst. But because banks typically lower or raise interest rates on savings accounts in close concert with the Fed’s movements, it is likely other banks offering high-yield savings accounts will follow their lead, if the Fed acts as predicted.

Still, it could be worse. “Even if the Fed lowers interest rates, many savers are still far, far ahead of where they were a few years ago,” says McBride. “This is hardly a sky is falling scenario. Savers are still earning returns above the rate of inflation,” which is currently about 1.8%. This means the return you’re getting for keeping your money in such accounts outpaces price increases on goods or services, preserving your spending power.

What’s more, high-yield savings accounts pay interest rates about 20 times higher than the national average of 0.10% for all savings accounts, according to calculations by NerdWallet.

Where To Find The Best Rates

High-yield savings accounts are unlikely to drop to that 0.10% average any time soon, according to experts. That’s thanks to heavy competition, with direct banks, broker-dealers, fintech companies and the North American operations of foreign banks all vying to retain and attract new customers and their deposits.

“Competiveness is good for the consumer,” says Adam Stockton, head of pricing strategy and analytics for Novantas, a bank consultancy firm. “Even if some banks decrease their rates aggressively, there could still be good options.”

Indeed, at the time Ally and Goldman were slashing their rates, online investment company Wealthfront increased the yield on its cash account offering to 2.57%, the highest available on the market, according to Business Insider. Unlike traditional savings accounts, a cash account is linked to a brokerage account, though funds are eligible for FDIC insurance.

Americans Are Saving More, And That Isn’t Necessarily Good 

Rather than falling as usual during the long expansion, the personal-saving rate keeps drifting higher.

From the 1980s through 2007, household saving followed a predictable pattern. It typically rose after a recession as people paid down debt and rebuilt balance sheets, then declined as they grew more optimistic—and spendthrift.

That hasn’t happened during the current expansion. The personal-saving rate, the portion of after-tax income that consumers don’t spend, rose from 3.7% in 2007, at the height of the housing bubble, to 6.5% in 2010, the year after the recession ended.

But since then, rather than falling, it has drifted up, to an average 8.2% in the first seven months of 2019. That is higher than the average for any full year since 2012, when incomes spiked as companies pulled forward dividend and bonus payments to beat a tax increase.

“That is evidence to suggest that something structural has changed, and it’s made the saving rate kind of sticky at higher levels,” said Tiffany Wilding, a U.S. economist at Pacific Investment Management Co.

Saving, which is the slice of paychecks, dividends and other earnings that Americans sock away, was up 17% in 2018 from the previous year, according to recently revised figures from the Commerce Department, beating consumer spending’s 5.2% and business investment’s 7.8%.

“The timing is no coincidence,” says Paul Ashworth, chief North American economist at Capital Economics. “The tax cuts seem to have been saved.” He notes the saving rate jumped by a full percentage point in January 2018, the month after President Trump signed the Tax Cuts and Jobs Act into law.

Economists point to other factors as well, including greater caution among consumers scarred by the 2007-09 recession, aging baby boomers preparing for retirement and a widening gap between the rich (who save a lot) and the poor (who save little).

Higher saving can be positive when it represents prudential behavior, for example preparation for retirement. It can also act as a cushion against recession. Rainy-day funds enable consumers—who account for two-thirds of economic output—to continue spending despite a job loss, reduced hours or slashed bonuses.

But whether savings serve as a recession cushion depends in part on how they are distributed. Wealthier Americans are less likely than middle- and lower-income families to change their spending patterns after a windfall such as a tax cut or a setback such as a recession.

“If you’re a billionaire, and you find $100 on the street, you’re probably not going to rush off to Walmart to spend it,” says Ian Shepherdson, founder of Pantheon Macroeconomics. “But if you’ve got no money, and you find $100 on the street, you are going to rush off to spend it.”

While the latest saving data aren’t broken down by income, some economists say the recent rise is likely being driven by the wealthy. Mark Zandi, chief economist at Moody’s Analytics, estimates that the wealthiest 10% of Americans accounted for more than three-fourths of the increase in the saving rate since the tax cut.

That cut increased after-tax incomes of the upper one-fifth of households—those making at least $149,400 a year—by 2.9%, versus 1.6% for the middle fifth and 0.4% for the bottom fifth, according to the Tax Policy Center, a research group.

Joe Norflus, a retired investment banker in Essex Co., New Jersey, whose income consists mostly of dividends and interest, said he benefited from the law’s lower tax rates and saw his net worth rise. But the earnings boost was “fairly insignificant” relative to his overall net worth, so he used it to increase his savings.

“The tax cut didn’t impact in any way, shape, or form my spending habits,” Mr. Norflus said.

On the other hand, economists say lower taxes did appear to boost spending by lower- and middle-class families last year. One sign: Sales were up 11% at discount retailers tracked by Redbook Research, compared with 3.4% at department stores.

Regardless of the cause, if saving outstrips investment opportunities for a long time, some economists say, it can hold down interest rates, inflation and economic growth. Such “secular stagnation” may leave less room to cut interest rates, making it harder for the Federal Reserve to boost growth during downturns.

“Rather than being a virtue, saving becomes a vice,” said Gauti Eggertsson, an economist at Brown University.

Mr. Ashworth said the data for a long time didn’t back the argument that rising inequality would boost saving and weigh on growth. That case looks stronger now that revisions have raised the saving rate, he said.

Updated: 10-14-2019

Interest Rates Are Falling—but Your Credit-Card Rate Could Be Going Up

To help cover generous rewards programs for affluent cardholders, banks raise rates.

Interest rates are going down. But consumers could find themselves paying more on their credit-card debt.

Banks’ generous rewards programs, offering free travel and other perks, are a hit with customers but have been eating into lenders’ profitability. To offset that pain, banks are charging cardholders more to borrow. The average annual percentage rate, or APR, on interest-charging credit cards is about 17%, according to Federal Reserve data. That is near its highest in more than two decades.

The increase might seem counterintuitive: Rates that lenders charge on credit cards are closely tied to broader interest rates, and the Fed has twice lowered rates in recent months.

Credit cards’ APRs are based on a broader market rate plus a margin set by the lenders, and lenders have been raising those margins. They can charge higher rates to consumers who get new cards, but in some cases they also can raise rates on existing cardholders.

Lenders tacked on an average margin of 11.72 percentage points on interest-charging cards in August, up from 10.6 points two years before. It is the highest margin on record, according to an analysis of Fed data by WalletHub.com, a consumer finance website.

Interest rates on private-label credit cards, which can be used only in certain stores, also are rising. The average APR on these cards reached 27.5% this year, a record, according to CreditCards.com.

Credit-card debt has surged in recent years. U.S. households with card balances owed an average of $8,602 in the second quarter, up 8% from the same period of 2015 when adjusted for inflation, according to an analysis of Fed data by WalletHub.com.

Card issuers essentially recruit two types of consumers: Affluent customers who spend a lot and pay their bills in full each month, and those who make at least their minimum required payment every month and carry balances. Higher rates are unlikely to affect customers who pay their bills in full each month.

Big card issuers, including JPMorgan Chase & Co. and American Express Co., in recent years rolled out large sign-up bonuses and other incentives to attract these wealthier customers to premium cards, by which points can be redeemed for airfare, hotel stays and other perks. But the cards weren’t the profit bonanza that companies hoped for.

Many savvy consumers game the system, reaping rewards before moving on to the next card. Many of them also pay their bills in full and avoid interest charges and late fees. Most banks have refrained from offering the massive sign-up bonuses that were popular a few years ago and have been scaling back other card features, but they also want to keep their affluent rewards customers because the lenders hope to sell them other bank products.

The extra charges paid by those who carry balances can help offset the profit hit that card issuers incur from the rewards programs. The interest charges borrowers rack up often wipe away the financial benefits they would receive from rewards programs.

Charging higher rates already has helped boost card divisions’ returns. Profitability had been declining for several years but ticked up in 2018, when broader interest rates rose and banks also raised their margins on credit-card rates.

Credit cards delivered a 3.8% return on assets to large banks highly concentrated in the card business in 2018, according to the latest data available from the Fed. That marked the first increase in returns since 2013. That figure will likely rise to 3.9% this year, according to a forecast by Brian Riley, director of credit practice at Mercator Advisory Group, a payments consulting firm. He also predicts that credit-card APRs will rise slightly over the next two years.

Charging higher rates also is a way for lenders to protect themselves against future loan losses. Rising charge-offs weighed on profitability in 2016 and 2017, and several lenders responded by tightening underwriting standards.

For lenders concerned that there will be a recession in the next year or two, “a natural response is ‘Let’s build in more cushion to those loans we’re originating…things are getting a little bit dicey,’” said Brian Foran, an analyst who covers banks and credit cards at Autonomous Research.

Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,Bitcoin’s Historical Returns Look,

 

Related Articles:

Bitcoin Information & Resources (#GotBitcoin?)

Man Takes Bitcoin Miner Seller To Tribunal Over Electricity Bill And Wins (#GotBitcoin?)

Bitcoin’s Computing Power Sets Record As Over 100K New Miners Go Online (#GotBitcoin?)

Walmart Coin And Libra Perform Major Public Relations For Bitcoin (#GotBitcoin?)

Judge Says Buying Bitcoin Via Credit Card Not Necessarily A Cash Advance (#GotBitcoin?)

Poll: If You’re A Stockowner Or Crypto-Currency Holder. What Will You Do When The Recession Comes?

1 In 5 Crypto Holders Are Women, New Report Reveals (#GotBitcoin?)

Beating Bakkt, Ledgerx Is First To Launch ‘Physical’ Bitcoin Futures In Us (#GotBitcoin?)

Facebook Warns Investors That Libra Stablecoin May Never Launch (#GotBitcoin?)

Government Money Printing Is ‘Rocket Fuel’ For Bitcoin (#GotBitcoin?)

Bitcoin-Friendly Square Cash App Stock Price Up 56% In 2019 (#GotBitcoin?)

Safeway Shoppers Can Now Get Bitcoin Back As Change At 894 US Stores (#GotBitcoin?)

TD Ameritrade CEO: There’s ‘Heightened Interest Again’ With Bitcoin (#GotBitcoin?)

Venezuela Sets New Bitcoin Volume Record Thanks To 10,000,000% Inflation (#GotBitcoin?)

Newegg Adds Bitcoin Payment Option To 73 More Countries (#GotBitcoin?)

China’s Schizophrenic Relationship With Bitcoin (#GotBitcoin?)

More Companies Build Products Around Crypto Hardware Wallets (#GotBitcoin?)

Bakkt Is Scheduled To Start Testing Its Bitcoin Futures Contracts Today (#GotBitcoin?)

Bitcoin Network Now 8 Times More Powerful Than It Was At $20K Price (#GotBitcoin?)

Crypto Exchange BitMEX Under Investigation By CFTC: Bloomberg (#GotBitcoin?)

“Bitcoin An ‘Unstoppable Force,” Says US Congressman At Crypto Hearing (#GotBitcoin?)

Bitcoin Network Is Moving $3 Billion Daily, Up 210% Since April (#GotBitcoin?)

Cryptocurrency Startups Get Partial Green Light From Washington

Fundstrat’s Tom Lee: Bitcoin Pullback Is Healthy, Fewer Searches Аre Good (#GotBitcoin?)

Bitcoin Lightning Nodes Are Snatching Funds From Bad Actors (#GotBitcoin?)

The Provident Bank Now Offers Deposit Services For Crypto-Related Entities (#GotBitcoin?)

Bitcoin Could Help Stop News Censorship From Space (#GotBitcoin?)

US Sanctions On Iran Crypto Mining — Inevitable Or Impossible? (#GotBitcoin?)

US Lawmaker Reintroduces ‘Safe Harbor’ Crypto Tax Bill In Congress (#GotBitcoin?)

EU Central Bank Won’t Add Bitcoin To Reserves — Says It’s Not A Currency (#GotBitcoin?)

The Miami Dolphins Now Accept Bitcoin And Litecoin Crypt-Currency Payments (#GotBitcoin?)

Trump Bashes Bitcoin And Alt-Right Is Mad As Hell (#GotBitcoin?)

Goldman Sachs Ramps Up Development Of New Secret Crypto Project (#GotBitcoin?)

Blockchain And AI Bond, Explained (#GotBitcoin?)

Grayscale Bitcoin Trust Outperformed Indexes In First Half Of 2019 (#GotBitcoin?)

XRP Is The Worst Performing Major Crypto Of 2019 (GotBitcoin?)

Bitcoin Back Near $12K As BTC Shorters Lose $44 Million In One Morning (#GotBitcoin?)

As Deutsche Bank Axes 18K Jobs, Bitcoin Offers A ‘Plan ฿”: VanEck Exec (#GotBitcoin?)

Argentina Drives Global LocalBitcoins Volume To Highest Since November (#GotBitcoin?)

‘I Would Buy’ Bitcoin If Growth Continues — Investment Legend Mobius (#GotBitcoin?)

Lawmakers Push For New Bitcoin Rules (#GotBitcoin?)

Facebook’s Libra Is Bad For African Americans (#GotBitcoin?)

Crypto Firm Charity Announces Alliance To Support Feminine Health (#GotBitcoin?)

Canadian Startup Wants To Upgrade Millions Of ATMs To Sell Bitcoin (#GotBitcoin?)

Trump Says US ‘Should Match’ China’s Money Printing Game (#GotBitcoin?)

Casa Launches Lightning Node Mobile App For Bitcoin Newbies (#GotBitcoin?)

Bitcoin Rally Fuels Market In Crypto Derivatives (#GotBitcoin?)

World’s First Zero-Fiat ‘Bitcoin Bond’ Now Available On Bloomberg Terminal (#GotBitcoin?)

Buying Bitcoin Has Been Profitable 98.2% Of The Days Since Creation (#GotBitcoin?)

Another Crypto Exchange Receives License For Crypto Futures

From ‘Ponzi’ To ‘We’re Working On It’ — BIS Chief Reverses Stance On Crypto (#GotBitcoin?)

These Are The Cities Googling ‘Bitcoin’ As Interest Hits 17-Month High (#GotBitcoin?)

Venezuelan Explains How Bitcoin Saves His Family (#GotBitcoin?)

Quantum Computing Vs. Blockchain: Impact On Cryptography

This Fund Is Riding Bitcoin To Top (#GotBitcoin?)

Bitcoin’s Surge Leaves Smaller Digital Currencies In The Dust (#GotBitcoin?)

Bitcoin Exchange Hits $1 Trillion In Trading Volume (#GotBitcoin?)

Bitcoin Breaks $200 Billion Market Cap For The First Time In 17 Months (#GotBitcoin?)

You Can Now Make State Tax Payments In Bitcoin (#GotBitcoin?)

Religious Organizations Make Ideal Places To Mine Bitcoin (#GotBitcoin?)

Goldman Sacs And JP Morgan Chase Finally Concede To Crypto-Currencies (#GotBitcoin?)

Bitcoin Heading For Fifth Month Of Gains Despite Price Correction (#GotBitcoin?)

Breez Reveals Lightning-Powered Bitcoin Payments App For IPhone (#GotBitcoin?)

Big Four Auditing Firm PwC Releases Cryptocurrency Auditing Software (#GotBitcoin?)

Amazon-Owned Twitch Quietly Brings Back Bitcoin Payments (#GotBitcoin?)

JPMorgan Will Pilot ‘JPM Coin’ Stablecoin By End Of 2019: Report (#GotBitcoin?)

Is There A Big Short In Bitcoin? (#GotBitcoin?)

Coinbase Hit With Outage As Bitcoin Price Drops $1.8K In 15 Minutes

Samourai Wallet Releases Privacy-Enhancing CoinJoin Feature (#GotBitcoin?)

There Are Now More Than 5,000 Bitcoin ATMs Around The World (#GotBitcoin?)

You Can Now Get Bitcoin Rewards When Booking At Hotels.Com (#GotBitcoin?)

North America’s Largest Solar Bitcoin Mining Farm Coming To California (#GotBitcoin?)

Bitcoin On Track For Best Second Quarter Price Gain On Record (#GotBitcoin?)

Bitcoin Hash Rate Climbs To New Record High Boosting Network Security (#GotBitcoin?)

Bitcoin Exceeds 1Million Active Addresses While Coinbase Custodies $1.3B In Assets

Why Bitcoin’s Price Suddenly Surged Back $5K (#GotBitcoin?)

Zebpay Becomes First Exchange To Add Lightning Payments For All Users (#GotBitcoin?)

Coinbase’s New Customer Incentive: Interest Payments, With A Crypto Twist (#GotBitcoin?)

The Best Bitcoin Debit (Cashback) Cards Of 2019 (#GotBitcoin?)

Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)

Ernst & Young Introduces Tax Tool For Reporting Cryptocurrencies (#GotBitcoin?)

Recession Is Looming, or Not. Here’s How To Know (#GotBitcoin?)

How Will Bitcoin Behave During A Recession? (#GotBitcoin?)

Many U.S. Financial Officers Think a Recession Will Hit Next Year (#GotBitcoin?)

Definite Signs of An Imminent Recession (#GotBitcoin?)

What A Recession Could Mean for Women’s Unemployment (#GotBitcoin?)

Investors Run Out of Options As Bitcoin, Stocks, Bonds, Oil Cave To Recession Fears (#GotBitcoin?)

Goldman Is Looking To Reduce “Marcus” Lending Goal On Credit (Recession) Caution (#GotBitcoin?)

Our Facebook Page

Your Questions And Comments Are Greatly Appreciated.

Monty H. & Carolyn A.

Go back

Leave a Reply