You are Actually Loosing Money now if you money in the bank is in a Passbook or Statement Account

As the interest rate on savings accounts has fallen, small, risk-averse savers have been hit hard. Someone with $100,000 in a savings account in 2000 was earning $2,000 to $3,000 a year. For the last two years, he has earned under $1,000 a year, maybe as little as $600. Last May, one survey reported the following: the typical saver was losing money!

Bankrate.com’s spring 2003 survey of passbook and statement savings interest rates shows that interest rates are continuing to plummet. Once again, rates have reached an all-time low since Bankrate.com began tracking these rates in 1987.

The national average interest rate for passbook accounts is 0.60 percent. That’s down from 0.80 percent last fall and 0.87 a year ago. Passbook accounts, in which customers track their deposits and withdrawals in a little book, are fairly rare.

Traditionally, passbook accounts have paid less than the more modern statement savings account. But in this survey, the results are equally dismal. The national average for statement savings accounts is 0.60 percent, down from 0.82 last fall and 0.92 a year ago.

If you put $500 in a savings account and left it there for a year, you’d get $3 interest, since the rate and the yield are the same. If you were in the 27 percent tax bracket, that $3 would be whittled down to $2.19. Subtract 3 percent for inflation and you have about $487 in buying power.

That was May. By October, the national average for banks was under 0.4%.
This information is taken from an article "Sitting on a String" by Gary North.


So you are loosing money, for the rate of inflation is more than the interest rates
the banks are paying. Your
Money in the Bank


is earning less than inflation is costing you