The Great Recession Cost Savers Billions: Here’s How to Turn That Around

Happy girl who is a saver
Photo by NARONGRIT LOKOOLPRAKIT / Shutterstock.com

More than a decade after the worst of the Great Recession, American savers are still feeling the pain.

In fact, bank customers have lost an estimated $500 billion to $600 billion in interest payments on bank accounts and money market funds during that time as a result of low rates, according to a new report from Wells Fargo analyst Mike Mayo.

Mayo’s observation was recorded in a research note about a congressional hearing, according to a CNBC report.

Federal Reserve policies in the wake of the financial crisis are to blame for the lost wealth, Mayo says.

To get the economy moving — and to keep the U.S. from falling from recession into a full-fledged economic depression — the Federal Reserve cut its benchmark federal funds rate to a low target range of 0% to 0.25% in 2009.

Banks responded to this move by slashing the rates they paid to customers with bank accounts and money market funds.

Rates remained in subterranean territory for years, costing savers billions of dollars in lost interest payments.

Recently, the Fed has begun raising rates again — nine times since 2015 — to a current range of 2.25% to 2.5%. Although rates on savings accounts and money market accounts are now a bit higher, they remain anemic by historical standards.

As Mayo says:

“Savers are still paying due to the financial crisis. It’s absolutely a wealth transfer from prudent savers to the borrowers and risk takers.”

How to boost your own savings rate

Fortunately — as with most things in life — you have the power to take a bad situation and make it a lot better.

If the return on your savings account remains stubbornly stuck in the cellar, take steps to move it to higher ground. Compare rates at various banks and credit unions, then transfer your money to the institution willing to give you the best deal.

Start by going to the Money Talks News Solutions Center and comparing rates. You’ll likely be glad you did.

Money Talks News Managing Editor Karla Bowsher took the plunge two years ago. In “How I Boosted My Savings Account Rate by 413 Percent,” she details how a willingness to survey the savings landscape paid big dividends. Her takeaway?

“For folks who have yet to switch to an online bank, the fastest way to get a higher interest rate for your savings is to leave a big brick-and-mortar bank for a competitive online bank.”

These days, you can earn more than 20 times the average interest rate at an online institution like CIT Bank, as we recently reported in “Earn 20 Times More on Your Savings Now.”

If the idea of moving money to an online bank makes you nervous, it shouldn’t. Check out “2-Minute Money Manager: Are Online, Internet-Only Banks Safe?” In that piece, Money Talks News founder Stacy Johnson shares insights that will put your fears to rest.

When you’re ready, start comparing rates. Investing a few minutes of time today can pay dividends for months and years to come.

Have you found a bank that pays great rates? Share your discovery with fellow savers in comments below or on our Facebook page.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
The 10 Best Outdoor Home Upgrades for Your Money
The 10 Best Outdoor Home Upgrades for Your Money

There’s still time this summer to make improvements to the exterior of your home. These offer the best payback.

Eat This Food If You Want to Avoid Alzheimer’s Disease
Eat This Food If You Want to Avoid Alzheimer’s Disease

One type of food associated with the Mediterranean diet offers especially large benefits.

7 Surprising Ways Retirees Waste Their Savings
7 Surprising Ways Retirees Waste Their Savings

You can make your retirement money last a lot longer by avoiding these costly mistakes

2 Costly Rewards Credit Card Mistakes — and How to Fix Them
2 Costly Rewards Credit Card Mistakes — and How to Fix Them

If you commit either of these credit card sins, you are likely losing money every time you use a card. Here’s how to easily right this wrong.

Top 5 Activities That People Dream of Doing in Retirement
Top 5 Activities That People Dream of Doing in Retirement

No. 1 isn’t visiting grandkids, and No. 4 might surprise you.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

This Is the Most Popular Age for Claiming Social Security
This Is the Most Popular Age for Claiming Social Security

Both men and women are most likely to start receiving Social Security benefits at this age.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

6 Things You Should Never Buy at Trader Joe’s
6 Things You Should Never Buy at Trader Joe’s

We love Trader Joe’s for plenty of reasons. But think twice about this handful of products.

7 Unusual Ways to Declutter Your Home
7 Unusual Ways to Declutter Your Home

Tired of possessions weighing you down? Here are seven ways to declutter painlessly and effectively.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have these documents that are crucial to their golden years — especially during a pandemic.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on both everyday and occasional purchases.

9 Dumb Ways You Are Ruining Your Home Value
9 Dumb Ways You Are Ruining Your Home Value

Homeowners, beware these mistakes that can drive away potential buyers.

18 Amazon Purchases That We Are Loving Right Now
18 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

15 Outrageously Overpriced Products — and How to Save on Them
15 Outrageously Overpriced Products — and How to Save on Them

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

Why Half of Retirees Now Owe Taxes on Social Security
Why Half of Retirees Now Owe Taxes on Social Security

Growing numbers of seniors are paying taxes on their Social Security benefits, but you might be able to avoid this fate.

11 Disgusting Household Items You Should Toss Already
11 Disgusting Household Items You Should Toss Already

Never keep these items past their prime.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.