$2.50 a Year in Interest? That’s What $5,000 in Savings Gets

Historically low interest rates are a boon for home buyers.

But for savers? Not so much.

Low rates for borrowers typically also mean lower rates for savers. Because banks are earning less on loans, they typically pay out less on savings to make money.

The average rate paid by banks on basic, federally insured savings accounts — known as the annual percentage yield — was a mere 0.05 percent as of Monday, according to the Federal Deposit Insurance Corporation.

That means if you had $5,000 in a savings account, you would earn $2.50 a year on your money.

“It’s almost an insult,” said Cheryl Costa, a wealth manager outside Boston.

Nor should savers count on an improvement anytime soon. The Federal Reserve has signaled that it expects to keep interest rates near zero for the next couple of years, as it manages the economy through the pandemic and its aftermath.

“The Fed has signaled that these low rates are going to be here for a while,” said Jonathan Clarke, an associate professor of finance at Georgia Tech’s Scheller College of Business.

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