cranes

Why are interest saving rates so so low in the US, compared to UK? E.g. Citibank offering 0.4% annual saving rate? Where do they save their money?? Doesn't this turn people off from moving to the US?

Michael

I think they UK government is mandating high interest rates on certain short term deposit accounts under a certain amount. After all, the discount interest rate in both countries is 0.5% and US 5/1 ARM mortgage rates are about 3.75% and 30 year fixed mortgage rates are about 4.75%.

Currently the highest interest paid on money market accounts in the US is between about 1.20%-1.35% at online banks such as Capital One, Alley, and ING direct.

emailrob

But its not the American dream to save money You should buy a large house that you can JUST about afford, and hope the market doesn't go down...

The upside on the mortgage part to remember is 30 year mortgages have FIXED interest rates for the duration of the loan. That is very different to the UK. So securing a mortgage at today's rates is quite attractive.

Bob

Because they can get away with it as people don't seem to care.

Jerseygirl

IMO buying something that you can 'just about afford' is a recipe for disaster. You could be OK...but it's not a gamble I'm comfortable with and would not take.

emailrob

I think you missed by sarcasm

Jerseygirl

Nooooooo...you don't think I am assimilating do you?

chriswinter

I remember...when a savings account paid 5.0% interest. Twas' a long time ago!

emailrob

Yep, you need to spend at least 3 months back in Yorkshire.

Michael

Yes but RBS (or the British government) is the only large bank in the world that has yet to turn a profit since the credit crisis. It is hard to make a profit when you are offering 3%-5% interest on deposits and lending it out for less than that.

Because RBS isn't turning a profit, its preferred shares are currently paying over 10% interest while most other large banks are paying about 6%-7% on their preferred shares.

Bob

Aye, but banks over here nickle and dime you a lot more with pretty much everything, so they can afford to offer marginally better interest rates...

Michael

Its not just US banks that are making decent profits now but ING, UBS, Credit Suisse, Deutsche Bank, HBSC, Barclays, and BNP Paribas but RBS is still hurting and Lloyd's is starting to recover.

Of course the Irish and Icelandic banks are basket cases.

Although RBS and Lloyd's are currently trailing behind the other European large banks, I don't think either of those banks have large bond holdings in Greece, Irish Allied Bank, or Portugal so if those countries/bank can't repay their loans in the future, RBS and Lloyd's may come out ahead of many of the other Large European banks.

scrubbedexpat091

I never understood this, I have never yet paid even a penny in fees to Bank of America, the checking account is free, I dont use other banks ATM's, dont after draft.

B of A doesn't even charge me to use my ATM card in Canada as long as I used a Scotia Bank.

Maybe I am lucky..lol

Canadians banks are worse, at my bank 10.95 a month gets you unlimited transactions and the ability to see a teller inside the bank.

3.95 a month gets you 12 monthly transactions and no teller visits.

I'll take US banks any day.

emailrob

They make their money out of investing your money like most banks. These investments have not necessarily been as fruitful in prior years and that, plus more regulation on things like overdraft changes, means the days of "free" banking are getting smaller and smaller.

robin1234

Forget savings accounts. A lot of Savings & Loans and credit unions are paying 3% or even as much as 5% interest on their full-service checking accounts now. You just have to use your debit card for purchase transactions a certain number of times each month. Also, these high rates are usually limited to the first $25,000 or $50,000 balance.

Just do a Google search for "high interest checking" or similar and you'll see more information...

We get 3% interest on our checking account, and no fees for anything. We now keep our "emergency savings" there (that is, the recommended 6 months to one year of expenses.)