Vanguard Survey: Savers' Rates Lag
A news release titled, "Vanguard Survey Reveals Savings Blind Spot: Idle Cash," states, "Vanguard's new national consumer survey revealed a startling savings blind spot: idle cash. While nearly 90% of Americans currently save or plan to save for short-term goals, 60% do not completely understand how interest rates impact their savings. This translates into most Americans putting their cash savings into vehicles that are slow growing—often trailing inflation. In fact, 57% of survey respondents report that their savings are earning less than 3% interest, including 24% earning less than 1%." Vanguard's Matt Benchener comments, "Americans are not earning the returns they deserve on their hard-earned cash. While the overwhelming majority are saving, most aren't saving in vehicles where their cash is getting a fair return. Vanguard is on a mission to change that with our Cash Plus account, potentially allowing Americans to earn eight times more than with a traditional bank savings account. With inflation and fluctuating interest rates impacting purchasing power, it's more important than ever to ensure that consumers understand how to safeguard their savings. It's time to start thinking beyond your bank." The release tells us, "While Americans are building their short-term savings for different purposes, like vacations (38%), new cars (31%), and unexpected home repairs (24%), many share one thing in common: their savings accounts aren't pulling their weight. More than half of respondents (54%) save in traditional bank savings accounts or checking accounts (39%), where average interest rates are roughly 0.41% compared to rates such as 3.65% in other savings vehicles, like Vanguard's Cash Plus account. This might contribute to the fact that 72% of Americans are not completely confident they will reach their savings goals over the next two years. Although Americans are not capitalizing on the interest their savings could earn, they recognize the need to change their savings behaviors. Sixty six percent of respondents plan to adjust their current savings strategy in the next year, citing inflation (44%) as the biggest driver of this decision. But nearly one-third of Americans don’t know how to start making those changes." Vanguard's Andrew Kadjeski adds, "By leveraging accounts with competitive yields and establishing intentional savings strategies, Americans can make their money work harder. We designed the Cash Plus account to give Americans a simple, effective way to save with intention and view their savings alongside their long-term investments." Finally, Vanguard's item says, "Cash Plus is currently yielding 3.65% APY, compared to the average bank savings account yield of 0.41%. In addition to a better yield, Cash Plus offers FDIC coverage, easy access to account and routing numbers for bill pay and direct deposit, connectivity to payment apps like PayPal and Venmo, and no minimum balance requirements. Along with Cash Plus, Vanguard also offers a full suite of liquidity solutions including money market and ultra-short-term bond funds."
