Today, they are the lowest in 7 years. And that's a substantial drop for savers. Money market fund rates also are sliding. The decline in savings rates hits retirees hardest. Many retirees also are conservative and stick to safe, income-producing vehicles such as bank certificates of deposit and money market mutual funds.
Younger people are typically much less risk-averse.
But the stock market hasn't responded yet. Suddenly, even meager earnings on CDs look good to investors seeking a haven, says Robert Heady, founding publisher of Bank Rate Monitor . Consumer spending is important to the economy, so the Federal Reserve wants to make sure that taking out a mortgage or borrowing on a credit card is affordable, experts say. But while savings rates are on a downward spiral, loan rates are a mixed bag. The rate cuts haven't added up to much in savings for mortgage borrowers so far this year.