Why are Online Savings accounts and CD interests so low?

The Federal Reserve controls the interest rates. The 5-6% rates you're talking about were before the major economic downturn. You won't see the rates you want for years:

http://abcnews.go.com/Business/fe...d=17226149

Quote from slickpost : They used to be 5-6% a few years ago and now they're like 0.20%...?? When will they go back to above 3%? What are better alternatives to Online Savings and CD accounts?

Same reason why I'm getting a mortgage for 2.5% currently where a few years ago it was double, or more of that. Interest rates across the board are doooooooooooooooooooown!

They'll go back up once our economy does. There are many alternatives but they have risks associated with them!

If it's worthwhile you can open a 5 year Ally CD for a much hither rate of return than .20% and in the event you need the $ you just lose 60 days worth of interest.

http://www.ally.com/bank/high-yie...#tabs=faqs

It's not stellar but if you want it to be safe and not earning .2% something like that may be your best option.

Has anyone found the break even point on early withdrawal from a 5 year? I could calculate, but I'm lazy

Plenty of accounts offering close to 1% with low or no minimums available. ING, Sun, Tiaa, Amboy, Ally

It's no 3-5% but it's much better than what the average Savings account pays.

Quote from LivninSC : There are many alternatives but they have risks associated with them!

Which is the point of low interest rates from the get-go.

Quote from Damix : Has anyone found the break even point on early withdrawal from a 5 year? I could calculate, but I'm lazy

Yes, this site is wonderful and updates monthly or so:

http://www.depositaccounts.com/bl...-2013.html

Quote from Damix : Has anyone found the break even point on early withdrawal from a 5 year? I could calculate, but I'm lazy

Yes, it depends (on the rates...)

Quote from LivninSC : Same reason why I'm getting a mortgage for 2.5% currently where a few years ago it was double, or more of that. Interest rates across the board are doooooooooooooooooooown! They'll go back up once our economy does. There are many alternatives but they have risks associated with them! If it's worthwhile you can open a 5 year Ally CD for a much hither rate of return than .20% and in the event you need the $ you just lose 60 days worth of interest. http://www.ally.com/bank/high-yie...#tabs=faqs It's not stellar but if you want it to be safe and not earning .2% something like that may be your best option.

Right now I would forget about savings accounts and CDs, in favor of rewards checking accounts. At least for the first 15-25k of your money (assuming you don't want to risk the money in investments that carry risk)
Several banks offering rewards checking accounts of 2-3% for up to the first 5k, 10k, or even higher.
Yes it's a bit of work; the requirements vary but are fairly standard - at least 1 direct deposit or bill pay, and around 12 or more debit card transactions a month to qualify for the higher interest rate. That's not so hard to do really.

no penalties, no early withdrawal fees, even if you miss the requirements for one month you just don't get the higher interest rate that month (you'll get it again if you meet the requirements next month), and when the landscape changes and savings accounts or other options are looking better, no problem to pull your money and move it elsewhere

Quote from impact1400 : The Federal Reserve controls the interest rates. The 5-6% rates you're talking about were before the major economic downturn. You won't see the rates you want for years: http://abcnews.go.com/Business/fe...d=17226149

http://en.wikipedia.org/wiki/Lost_Decade_(Japan) * how ever long we keep the music playing

Quote from LivninSC : Same reason why I'm getting a mortgage for 2.5% currently where a few years ago it was double, or more of that. Interest rates across the board are doooooooooooooooooooown! They'll go back up once our economy does. There are many alternatives but they have risks associated with them! If it's worthwhile you can open a 5 year Ally CD for a much hither rate of return than .20% and in the event you need the $ you just lose 60 days worth of interest. http://www.ally.com/bank/high-yie...#tabs=faqs It's not stellar but if you want it to be safe and not earning .2% something like that may be your best option.

Nothing has changed at all since 2008. The Fed will become SOP for the US economy. Hell, it will probably become part of the legislative branch.

I remember the first time I opened up an ING savings account after I started my first job out of college...opened at 5% and watched it dwindle down to nada in months.