Columnist James McCusker recently bemoaned the low savings rate of his fellow Americans. He and other economists point out that money in savings accounts provided an essential pool of cash for loans to home buyers or small business entrepreneurs.
This particular pool of money has shrunk markedly in the last decade. However, is it just possible that yet another pool of cash is serving as our engine of growth? Channel 9 recently reported that Americans paid $1.1 billion of interest on credit cards in 2003. That money, for the most part, ends up in the same coffers savings would have gone to. The difference, for one, being that the cost to issuing banks is a lot less than paying interest on savings accounts. This may be the reason we don’t hear many complaints from banks about the situation.
BENITA HELSETH
Lake Stevens
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