On the Money Feds rate cuts strike savers pocketbooks

NEW YORK — Just when bank customers were finally getting something reasonable for their hard-earned savings, the party is coming to an end.After several years of increasing the meagre interest they paid on savings accounts and certificates of deposit, banks are starting to trim their offerings to savers. The declines are slight, usually less than 0.25 of a percentage point, but the trend is certain to continue for at least the next six months to a year, experts say.Blame the Federal Reserve, which cut interest rates in July and is widely expected to cut them again this year to help insulate the economy from the Trump administration’s trade disruptions and to support the stock market.U.S. President Donald Trump has repeatedly attacked the Fed for failing to cut rates aggressively, and has used his criticism to link the Fed’s moves with outcomes of the stock market. However, while nearly all households have savings accounts, a tiny minority own the vast majority of stocks.“There’s a lot more economic certainty and thoughts of a potential economic slowdown, and that’s been driving a lot of banks to cut back on what they’re offering to customers,” said Ken Tumin, founder of banking news site Depositaccounts.com.Some banks didn’t wait for the Fed to cut rates. Earlier this summer Goldman Sachs cut Marcus’ online savings rate to 2.15% from 2.25%, while competitor Ally cut its rate from 2.2% to 2.1%.The average online-only bank now offers an interest rate of around 1.68%.After the Great Recession, savers looking to safely store their cash and make a modest return had few, mostly terrible options. The Federal Reserve cut its benchmark interest rate to zero and kept it that way for years. It was not uncommon to see a big bank like Bank of America or Wells Fargo offer 0.02% or even 0.01% on a traditional savings account. Even online savings accounts, which typically offer rates far higher than brick-and-mortar establishments, offered only 1%.Banks didn’t have to offer enticing rates because they largely didn’t need deposits. Lending slowed considerably after the Great Recession, and new regulations kept banks from lending too dangerously, so the need for deposits to fuel that lending waned.But as the economy recovered, however, and the Fed steadily raised interest rates from near-zero to 2.50% at its highest level, banks started offering more to savers. Banks also started offering more loans, which in turn meant the competition for deposits heated up.But that competition for deposits is now dwindling and banks are not as willing to pay for long-term deposits as they used to. For example, six months ago an average bank was willing to pay 2.24% for a five-year CD. That’s declined now to 2.16%. The decline is small, but expected to continue downward.Savers looking for new places to lock-away money and get some sort of yield should check out no-penalty CDs offered by banks like Marcus, Tumin says. While the rate is not much higher than what a customer might get in an online-only savings account, no-penalty CDs allow a customer to lock in a rate for a year.If the Federal Reserve does cut interest rates again this year or next year, at least a saver would have locked in that higher yield and there would be no penalty for pulling the money out in most cases.Lower interest rates have been good news for some, however. Big banks cut their so-called prime rate almost immediately after the Fed’s July rate cut. That means lower interest costs for borrowers, as the prime rate is typically used to determine the interest rate on credit cards.Mortgage rates have also declined, with the average 30-year fixed-rate mortgage now averaging around 3.81%, compared to 4.44% in March.Ken Sweet, The Associated Press read more

Goodman student chosen as ambassador for exchange programs

For Goodman School of Business student Berina Colakovic, there is no better experience a university student can have than to go on an international exchange.Colakovic is one of about 30 students across North America who have recently been hired by the German Academic Exchange Service (DAAD) to help promote studying and researching in Germany to their peers through the Young Ambassador program. Colakovic is the first Brock University student to be hired through this program. Going on exchange is the best thing I’ve done at university. It opened my eyes to so many new experiences and it really changed me.The opportunity to volunteer for DAAD arose because of Colakovic’s own exchange experience. She spent last fall on exchange in Germany at the University of Mannheim where she took business courses and immersed herself into German culture. She found the experience to be powerful and impactful, and now wants to share what she learned with other students. “Going on exchange is the best thing I’ve done at university. It opened my eyes to so many new experiences and it really changed me,” says Colakovic. “I’m excited to share my experience with students and help them see the benefits of these programs.” As she finishes up her studies this year, Colakovic looks ahead with the goal of returning to Germany for a master’s program.In addition to her young ambassador duties, which will include a full training workshop over four days in New York City to refine public speaking skills and learn more about German exchange programs, Colakovic will work on a volunteer basis with Goodman’s international exchanges and partnerships office to assist with promoting all international exchange opportunities to Goodman students.Brock’s Goodman School of Business currently partners with over 40 business schools around the world, including five partners in Germany. Goodman students going on exchange programs take courses in English that count towards their degrees. read more