Capital One Quick Silver Commercial

It doesn’t take much these days to fool the population on the subject of money. Even if it means forgoing the idea of saving money for cash back instead. Who would think that by hiring celebrities to endorse banks with cash back credit cards, that spending your money could earn you cash back. While using slogans like, “Get cash back when you shop,” or “Earn cash when you spend” makes the everyday citizen a gullible consumer. Only in an illusionary economic recovery could people believe that the same banking institutions that caused the financial panic of 2008 would now be interested in putting cash back into your pockets.

Not only does conventional wisdom no longer seem ideal but it seems like all common sense has left with it.  Not long ago was saving money a necessity, but making sure you were getting the best rate of return when loaning your money to banks was the main concern.

Since the financial meltdown of 2008 the idea of getting any return on your deposit in the bank is non-existent. While the mainstream media and politicians promote an alleged economic recovery; banks having received trillions in bail out money now borrow (or hold your deposit) money for virtually FREE.

National Rates from FDIC

If you were to check your bank statement and see what percentage of a return in interest they offer it should be eye opening. As of September 2015 the national average of a 1 month CD (Certificate of Deposit) is .06%. The “national rate” as a simple average of rates paid by U.S. depository institutions as calculated by the FDIC. If you look at the national rates in the picture you will see that the Savings rate on an ordinary account is the exact same as a 1 month CD.

This illustration plays right into the promotion of Cash Back. What would be the point in locking your money into a Certificate of Deposit which has withdrawal limitations and possible fees for a measly .06% a month. Why not just put it into a Savings account and have unrestricted access and save yourself the hassle. Just to show you how insane the idea of earning interest on loaning the bank your money really is, take the example of depositing $100 into the bank.

At the current national rate for a Savings account (some banks nationally may pay more of course) of 0.06%, at the end of the month your savings account balance would be $100.06. This low rate of return is well below the traditional interest rates prior to 2008. Since the banking system operates by credit expansion, the primary objective of all banks is to pay you less while getting you to borrow or create more digital transactions via their debt/credit cards.

As you can see that since we are no longer in a saving friendly environment, the way to keep the system going is to encourage consumption. The more incentives there are to spend and not save, the less pressure for a return on savings. The banks would rather you save less and spend more so they get off the hook for not paying you real interest above the rate of inflation. After all, doesn’t it sound better to spend $100 and get $1.50 back on your purchase than to save your money and get .06% worth of interest?

In my opinion, we are living in an upside down economy when saving is discouraged and earning cash back to spend is an incentive. This flawed financial motto is very dangerous and reckless for those that are unaware. Once people realize that the agenda is to keep them consuming and not saving it will hopefully wake people up and demand higher interest for saving. If not people will continue to believe that you can actually earn money by spending money yet being robbed in their savings account.

When was the last time you checked your bank statement and saw the rate of interest you were being given? Where does it compare to the national average?  Does it bother you that the bank is borrowing your money and giving you little to no interest in return? Share your thoughts.