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Savings account rates in Indiana among lowest in nation

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In Indianapolis, you can find interest rates on savings accounts so low that even Mr. Potter from “It’s a Wonderful Life” might shed a tear for bank customers.

The average savings account in Indianapolis now pays a mere 0.072 percent, according to a survey by GoBankingRates.com.

You read it right: 0.072 percent.

It could be worse. Banks in Indiana’s second-largest city, Fort Wayne, pay an average 0.046 interest on basic savings. 

As a whole, Indiana averaged 0.056 percent—making it fifth-lowest among 50 states and the District of Columbia, according to the survey. Arkansas had the highest average savings return, at 0.204 percent, while North Dakota had the lowest, at 0.035 percent.

In a banking world where you once could earn 5 percent on a savings account, even the country's most generous current rates might seem sub-atomic. Los Angeles-based GoBanking didn’t use an electron microscope, but rather surveyed more than 4,000 financial institutions around the country.

The Indianapolis metro area came in at mid-pack, at No. 55 for highest rate among the nation’s top 100 cities. Fort Wayne was No. 95.

The city with the highest average rate was New Orleans, at 0.216 percent, while the lowest was Lincoln, Neb., at 0.034 percent. 

The second-worst city for savings rates was nearby Cincinnati, ranking No. 99 at 0.037 percent. Cincinnati is home of the some of the biggest banks in the region, including Fifth Third Bank and First Financial Bank.

Rates in any city are determined by numerous factors in the local economy, said Amanda Garcia, an analyst at GoBankingRates.

The intensity of competition among banks in a given market can be one factor, said Michael Renninger, CEO of Renninger  & Associates in Carmel.

Each bank’s management needs to balance the need to attract deposits with loan demand, anticipated deposit run-off, availability of other borrowing alternatives and other liquidity needs, he said.

“For instance, if loan demand is light, the need to attract additional deposits is diminished,” he said.

Other factors include rates being earned by the bank on investments and loans, Renninger said.

“We all know that actions by the Federal Reserve Board have kept [lending] interest rates artificially low. Low rates earned by banks on assets results in lower rates paid by banks for deposits," he said.

But Indiana's dismal ranking among other states makes one wonder why financial institutions pay such low interest rates here in the state.

It could be that banks in the state have comparatively lower loan demand, Renninger said.

GoBankingRates.com Managing Editor Casey Bond noted that the difference in average rates between the highest- and lowest-raking states was pretty miniscule—just 0.169 percent.

"The averages are indicative of the local savings climate and can help depositors determine whether banks are actively encouraging deposits in their area," Bond wrote in the study.

“After years of rock-bottom rates we’re all hoping to see savings account rates rise again,” Bond wrote. “And while we might not get our wish any time soon, some depositors will find that they can eke out slightly higher earnings on savings if they live in the right place.”

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  • Ditch your local bank (at least for savings)
    Online, FDIC-insured banks pay 10+ times the amount that local banks pay. Yes, the rates are not great historically speaking, but they're way better than want local banks are paying. Current savings rate examples: Ally Bank 0.85%, GE Capital Bank 0.90%. No fees, no minimums (I sound like a bank salesman!). Check for yourself: https://origin.bankrate.com/funnel/savings/savings-results.aspx?local=false?s=33

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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