Higher Savings/CD Rates (interest, money, income, 401k)

[DSOs]

Would you spend more if you were earning more interest on your Savings/CD accounts?

Please explain your reasoning.

[DSOs]

I voted yes.

Why can’t ‘market psychology’ work for the little person? Even a single mom with 2 children would feel psychologically secure if she had $500 in a saving account collecting interest. I feel the bottom 53% of the population can stimulate the economy gradually but stably if they had some money in the bank—market psychology!

How to get the lower 53% to put $500 in the bank—reward them somehow!

[TTTenor]

I am retired. I consider interest on savings as part of my income, meant to be spent.

Nevertheless, I have not spent any of my retirement savings since the interest rates were made nearly zero.

Interest rates of five percent or more would make a big difference in my standard of living.

[Zoo Animals On Wheels]

Maybe I'm nuts, but if interest rates were higher for CDs (or savings and checking accounts), I would want to save more and spend less. Right now, with interest rates virtually nil, I tend to think that I may as well spend the money on X because this time next year it'll probably be 3-5% more expensive, and if I saved the money, it would only grow by 1%.

[bentlebee]

Absolutely! When i get less I spent less!

[DSOs]

Originally Posted by Zoo Animals On Wheels

Maybe I'm nuts, but if interest rates were higher for CDs (or savings and checking accounts), I would want to save more and spend less.

If that was true then people would have spent less as their homes/401k’s appreciated & we know that’s opposite of what happened; the more wealth people had/felt the more they spent. Houses & 401k’s are analogous to Savings/CD accounts.

Savers won’t spend hastily either since there are no illusions of wealth. If you have a 3k CD you know you have 3k—no illusions. The saver may keep saving but there will come a time when that saver will want to spend.

There are economists out there who ostracize savers instead of including them into the economy. This is flawed & ridiculous thinking!