Once upon a time in the United States, regular savings accounts paid over 5% interest. The May 31, 1979, issue of the New York Times reported that federal regulators allowed commercial banks to pay 5.25% interest on their savings accounts, while savings and loans and mutual savings banks were able to pay as high as 5.5%.
The reason for such a “high” rate of return was the inflation rate in 1979 – 11.35%. Inflation was an issue throughout the 1970s – does anyone remember President Gerald Ford’s 1974 program called “Whip Inflation Now” or “WIN”? The program had little effectiveness. Inflation did drop in the later 70s but exploded at the end of the decade. It reached its peak in April 1980 at 14.76%. In comparison, the current U.S. inflation rate as of April 2022 is 8.3%.
