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The APY Game

    📂 Financial         🗨 No Comments

It has been only a few days since I posted about the 4% savings account at Dollar Savings Direct. I characterized the rate as "unheard-of". Apparently the folks over at the bank agreed and over the weekend they lopped off 0.5% from the APY bringing the interest rate down to 3.5%.

You really can't blame them for lowering the rate. 4% was just way too high in the current low interest rate market. But that's how the game is played. You set a high rate on the account and advertise the devil out of it to attract enough money. Then you lower the rate to a reasonable level to keep existing customers from jumping ship while new money continues to arrive, albeit at a slower rate. And you keep adjusting the rate to keep the money flow steady.

Well, 3.5% APY is still a decent rate, but who knows where it'll stand next week, or the week after.


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