Good banking deals are getting harder and harder to come by – and that won’t change for the better after the Federal Reserve kicks off its government bond buying spree.
Yesterday, Fed officials floated a plan to spend $100 billion per month in monetary stimulus, primarily via the purchase of U.S. Treasury debt.
With the U.S. economy expected to grow at a tepid 1.9% for the third quarter of 2010, Fed officials obviously believe that more aggressive stimulus measures are needed, and cutting long-term interest rates through government debt purchases is the way they have chosen to go.
As Atlanta Fed President Dennis Lockhart said in an interview on CNBC yesterday, the bond buying program isn’t a matter of “if” but “when” and “how much”.
"If we're going to pursue another round of quantitative easing, it has to be a large enough number to make a difference," Lockhart said. "As a monthly number [$100 billion] is fairly consistent with what we did before, and so I think it would certainly be in the range of numbers one might consider ... but if you were talking about $100 billion as simply the overall program, I think that's too small," he said.Nothing is guaranteed though, and the Federal Reserve doesn’t meet for another two weeks, on Nov. 2 and 3. But if the Fed opts for the bond-buying gambit, expect bank rates to remain low for the duration of the Fed’s shopping spree.
Now, onto this week’s deals.
Money Market Accounts
The national average for interest rates on money market accounts, as calculated by the BankingMyWay MMA Rate tracker, is a paltry 0.273%.
But Discover Bank (Stock Quote: DFS) seems determined to blow that number up off the map.
Discover is offering a money market account rate of 1.00% and higher for deep-pocketed savers. There aren’t any fees attached to the deal, and you can get free transfers, automatic bill pay, a debit card option, and mobile banking money transfers.