With the recent bank failures of Indy Mac and Bear Sterns, many people have wondered how safe their money is. Others, such as Citibank and Bank of America, have also been hit pretty hard by the falling out of the sub-prime mortgage market, and many are wondering if their savings with these banks are safe. Fortunately your money is insured up to $100,000 in savings and for those with more than that there are various moves one can make to increase that amount, such as making use of the CDARS program.

If you’re a saver and have made all the right moves and make sure that all of your money is insured either by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Alliance (NCUA), this is an absolute great time to be a saver in certificates of deposit and online savings accounts.

The Financial Times of London recently reported that many major banks in the United States have billions of dollars worth of debt, a lot of which is related to real estate, that will be maturing over the next few months and they will need to scramble to refinance it. Since the lending market is not nearly as favorable now as it was a couple of years ago, they will have much higher costs in funding loans and thus need to raise capital. One of the best ways for them to do that is to attract additional savings deposits and the best way to do that is by raising interest rates.

There’s already been an increase in certificate of deposit interest rates by about 0.5% in the last three and a half months and chances are additional rate hikes will be coming soon from a number of different banks to attract more deposits additional deposits. We’ve already seen a few online savings accounts raise their interest rates to attract new deposits. For example, Washington Mutual raised their interest rate to 3.75% just a few weeks ago.

How does this affect you as a saver? If you’re planning on getting a long term certificate of deposit in the near future, it might make more sense to purchase a 3 month CD and wait and see where interest rates are at then. You could easily get another 50 basis points in interest on your money. If your savings is in an online savings account, you might want to consider switching banks to a company offering more competitive rates if your bank doesn’t keep up. Either way, it’s a great time for savers.

If you’re looking for great interest rates on Savings and CDs, head on over to our friends at Bank Deals for a listing of banks offering great interest rates.

This entry was posted on Thursday, August 21st, 2008 at 8:20 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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