Around eight or so years ago I distinctly remember getting paid 4% interest on our simple savings account with Washington Mutual bank. That was a promotional deal of some sort if I recall right but I didn't have to do anything special to get it. Now it seems like that kind of interest rate on savings is something of the distant past. I think we're getting 0.000001% from our bank right now. Or more or less close to it. 1 cent a month. With the interest rates we've got right now your savings are not keeping up with inflation. But is this the norm? I remember that 4% interest rate not long ago and that should have been able to keep up with inflation.
I couldn't find good history of interest rates for CDs or savings specifically. But I did find Federal Reserve H.15 tables for interest rates on 3 month commercial paper.
I got the inflation figures off the BLS site.
For both I'm representing the annual averages of the interest rate and the inflation rate.
Here's a chart showing the interest rate versus inflation for 1997 to 2016:
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| (click for full size) |
You can see there that the rates paid by banks were quite a bit higher in the not too distant past.
For about the past 10 years we've had interest rates that are pretty low and don't keep up for inflation. But if you look back to the previous 10 years from 1997 to 2006 the opposite was true for many of those years.
Overall for the 20 year period the annual interest rate averaged 2.4% and the inflation rate averaged 2.2%.
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