Issue #51: I guarantee you'll find this interest-ing

When the economy is strong, the rate is high, and the inverse is true when the economy is weak (like it is right now). The Fed reduced the interest rate in March, and projections indicate rates will stay around 0 until 2022.

“This was an attempt to help rebuild economic damages caused by the coronavirus,” says Brandon Goldstein, a financial planner for Prudential Financial. “These low interest rates encourage people to spend and put money back into our economy.”

Financial institutions tend to follow the Fed’s lead. As Talwar puts it, “Every time we change rates — up or down — we take the above factors into account.”

Because banks look so closely to the Fed for guidance, they probably won’t raise rates until the Fed does. And that could be a long way off. Chairman Jerome Powell told reporters he’s “not even thinking about thinking about raising rates.” So.

“The Federal Reserve will likely wait until the economy is close to normal before they increase the rates again,” Goldstein says. “For the foreseeable future, I don’t anticipate these savings account rates to rise.”

It’s not all bad news. Talwar points out that even the lowered rate is over 15 times higher than the national average, which according to the FDIC is 0.06%.

Just because I’m not earning much in interest doesn’t mean I shouldn’t save, says Marguerita Cheng, the CEO of Blue Ocean Global Wealth and an ambassador of the CFP Board.

Upon receiving an email that my APY has dropped, she says my first move should be to look into what other products and services the online bank offers. If I’m all right with a bigger minimum balance and limited deposits, maybe I could find a money market account with a favorable interest rate. (Cheng says I may want to avoid pursuing a certificate of deposit, or CD, that would tie money up for years at today’s unimpressive rates.)

Goldstein says I may also want to shop around and see if a competitor offers a better APY. I don’t have to keep my savings online, either: Cheng suggests checking into community banks and credit unions.

(but please don't tell me you scrolled past all of my hard work)

Interest rates are messed up because they’re tied closely to what the Fed is doing. The Fed is trying to help the economy, so it’s keeping rates low — and it’ll probably stay that way for a long time.

However, that doesn’t mean all hope is lost. The low rates suck for supersavers, but they can benefit home and car buyers. Cheng recommended I examine other parts of my portfolio. Can I use the low rates to refinance my mortgage? Can I eliminate some credit card debt?

“Your financial plan isn’t not going to work because the Fed cut interest rates,” Cheng says. “There are things you can do.”

check out this crazy celebrity purchase

via Instagram

After doing some casual home-shopping on Instagram, LeBron James (LeBraaawn Jaaames) is reportedly buying a $39 million mansion in Beverly Hills. The house has four bedrooms, eight bathrooms, seven fireplaces, two guest houses and a home theater… but no basketball court. Interesting Decision.

five things I'm loving online right now

send me cute pictures of your pets, please

CREDIT: DONNA SMITH

This is Berry, a 14-year-old with a gorgeous orange nose. Berry only cares about the interest rate on tuna and milk.

Another fun fact about the pop quiz is that the two questions that prompted the most wrong answers were about the National Bureau of Economic Research and Harry Styles. In other words, Dollar Scholar has the range.

See you next week.

Julia

P.S. Thank you to everyone who sent me kind words about Dollar Scholar's birthday! I loved seeing you brag about your grades. Shoutout to Scholars Garey, Noni, Dave, Mike S., Matt, Shayna, Christine, Delanie, MySpace44, Steve, Denise, Mike A., Jenn, Prachi, Katherine K., @A_Faygo, Timothy, Jenna, Katherine C., Lorilin, Brian, dalfire497 and Michelle for getting As. Gold stars all around.

P.P.S. Back to business... have your interest rates dropped? How are you maximizing your savings during these rough economic times? Are you dressing like a camp counselor in quarantine? Tell me plz at julia.glum@money.com or @SuperJulia. Your holla may be featured here in the next issue!