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Online Savings & Money Market Account Rates 2022

Online Savings & Money Market Account Rates

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Federal Reserve Announces Slow Tapering, Fails to Provide Guidance on Raising Rates, Causes Loss of Purchasing Power for Savers

The Federal Reserve has tapered its bond buying, beginning to contract its $120 billion monthly bond buying purchases that propped up the economy after COVID-19 struck in March 2020.  The bond buying will be decreasing by about $15 billion a month.

The Fed’s actions – and other stimuli that have been introduced – served its purpose initially.  Powell not only prevented a catastrophic recession in 2020; he also kept financial markets intact and maintained full employment.

But, these types of actions were designed to address an emergency and to keep things intact through 2021.  They also, though not designed, created inflation that is by even the most conservative metrics running well above 3.50%, and by more realistic metrics as high as 7.00%.  In short, we now have rampant inflation that is reflected in the price of everything from bread to mega-mansions.

After the Fed first lowered interest rates to its current range of zero to 0.25% on March 15, 2020, Chairman Powell guided that it would hold interest rates at this level until 2023 or 2024.   Somehow, Powell has been unable or unwilling to process new information as it has come to him, and he has held the Federal Reserve to this pronouncement through 2021.   In fact, Powell is unwilling to commit to any sort of schedule to raise rates in 2022.

The Fed and the Treasury Secretary insist that the inflation we are seeing is transitory.   The new language released today is that inflation “is expected to be transitory”.

Regardless of whether inflation is transitory or not, it is here now, and the Fed is way behind the curve.  Holding interest rates at this level is now creating a complete diminution of people’s purchasing power.  $1000 that you earn today can be worth $1005 in one year if you put it in an online savings account or online CD, and that $1005 will buy you goods and services that today would cost you only $930, if you are lucky.

In emerging markets that have experienced this kind of currency depreciation, people would run to the bank and place their money in a high yielding account or switch it into dollars. This is not possible here, unfortunately.

In the US, our alternative currency has become Bitcoin, a virtual token that isn’t a currency at all and that has so far failed to emerge as a currency (except where it is used to pay off international hacks).   It was established as a Ponzi scheme and it may now be forced through circumstances of the Fed’s creation to replace the US dollar as the most accepted means of exchange.  

By just announcing a taper and failing to at least begin to address this reality by raising the Fed funds rate, the Fed is showing that it just doesn’t care.

Examining the Banks’ Climate Policies Critically

It is pretty clear at this stage that those of us alive today and our children, grandchildren and their descendants are facing a climate crisis unlike anything the inhabitants of Earth have ever faced.   It is also very clear that this crisis largely emanates from our addiction to fossil fuel over the last half century.

As we begin to grapple with the challenges we face, there is an increasing desire to blame the major money center banks for their continued funding of fossil fuels.  In fact, if you drive down the west side of Manhattan you will see advertisements for a smart-up mobile app that will keep deposits away from fossil fuels (and but pay a rate below leading online savings rates).

We have all made mistakes in our reliance on fossil fuels in the past.   That includes the banks.  I myself worked for major European banks that were funding BP and Royal Dutch Shell’s exploration around the world.  I also practiced law in Russia where I advised Exxon on Sakhalin 1.  If I had understood the consequences of those operations, I would have refused to do the work, and that is true of everybody who I worked with.   We are all guilty of recognizing the crisis much too late.  The banks too.

But, our path to transitioning out of fossil fuels to renewable energy is also going to rely on established banking systems.  There is such an extraordinary amount of investment that is going to need to made immediately to effect this transition that there simply is no other source that can lead in this arena.

I performed a little bit of research recently to learn more about the progress that major global banks are making in their lending to renewable projects worldwide.   I came across multiple reports on the banking industry’s current loans to the fossil fuels industry.   These reports all slam JP Morgan Chase, which is now the largest bank in the US and hence the largest covered by BestCashCow, for its outsized and outstanding loans to companies like Chevron and Exxon without, at the same time, recognizing the history of these loans (i.e., when these loans were placed).  None of these reports asks whether the bank can even divest itself of these loans.   One report (Banking on Climate Chaos by the Rainforest Action Network) goes so far as to attack Chase for lending to Iberdrola, Orsted and Siemens Energy.     Iberdrola and Orsted, of course, are now the largest offshore wind operators in the world and will be vital in the US’s efforts to transition away from fossils.  Siemens Energy, likewise, is a manufacturer of solutions relating to wind, solar and energy storage and transmission.   Quite simply, it would be irresponsible for Chase not to be increasing its lending to these three companies right now.

The point is simple.  We need leadership from the banks on the climate crisis.  Rather than rushing to judgment, we need to give them the opportunity to outline their actions and their forward  plans to address the climate crisis.   Banks are now free to outline their policies on BestCashCow for their customers and potential customers.   Read what they have to say on their bank pages on this site or ask them directly for their policy, if they haven’t outlined it.  Examine their actions critically, looking at the investment to renewable companies as well as fossil fuel companies.   And, only then should we hold them to account.

Bask Bank Launches New Online Savings Account Paying 0.60% APY, but There is a Catch

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Bask Bank, a division of Texas Capital Bank, has launched a new online savings account.   The account, called an Interest Savings Account, is paying 0.60% APY.   The rate is clearly among the best online savings rate available at the moment (compare rates here), and is above the 0.50% APY currently offered by BankDirect, which is also a Texas Capital Bank subsidiary.

The catch here is that this account is only available to those customers of Bask Bank who have first opened an account that earns American Airlines AAdvantage® Miles.  We’ve written previously about Bask’s primary offer before, most recently last December here.  

Bask Mileage Savings Account pays 1 AAdvantage® mile for every dollar on deposit per year.   In other words, $250,000 on deposit as Bask for 12 months will earn 250,000 American miles.   Anyone who travels by air at all values these miles at well over a penny each and therefore this account is especially compelling as long as rates remain below 1% (and arguably remains compelling even when savings and CD rates are around 2%, as they were when Bask launched in early 2019).

Today, the 0.60% APY rate on its face is compelling, but there are other places where you can this rate or close to this rate, and those who are not interested in Bask Bank’s core mileage earning account should probably seek out one of these accounts.  But, for those who recognize the value in AAdvantage® miles and are interested in earning AAdvantage® miles as long as savings rates remain low, Bask’s new Interest Savings Account may represent an interesting development.  Bask Bank is now indicating that it will offer a cash interest-earning alternative as rates rise (so you may not need to move accounts when rates eventually go higher) and it is already enabling customers the ability to toggle between American miles and cash interest.    And, that just may be enough of an incentive to jump over to earning AAdvantage® miles from Bask Bank as long as savings rates remain so low.