Irwin Kellner, the Chief Economist or Marketwatch came out with an article today parroting what we've been saying for the last year: the Fed is punishing savers to the benefit of borrowers. The mainstream press has sporadically written articles about this but it's good to see it continuing to get attention.

In his article he writes:

"It can't come a moment too soon for the silent majority -- the nation's savers.

In its efforts to shore up the banking system, the Fed has neglected the needs of those who save. And in case you did not know it, savers make up the bulk of the population."

But are savers the silent majority? When you add up everone who has a mortgage, credit card, car payment, home equity loan, business loan, etc. I find it hard to believe that there are more savers. We run on a credit economy, not a saver's economy. That's why the outcry over low interest rates hasn't been louder. There are a lot of people who have debt or use credit and they are all benefitting in the current environment.

I know that I am. I'm a saver but I also benefitted from low rates by refinancing my mortgage.

The other question to ask is, did the Fed have any choice? Shouldn't credit be less expensive in a financial meltdown? After all, it makes no sense to raise interest rates while the economy is crumbling. The Fed is not going to keep rates at 5%. Of course rates were going to come down.

But that doesn't make it an easy pill for those loving on a fixed-income to swallow.

What can a saver do? Get smart. Look for the very best places to put money. Don't let money sit in a savings account earning 0.5% when banks are offering 1.5%. Look for the very best CD rates. Shop around.

If all the talk about inflation is correct, then savers may soon see their fortunes reversed, as rates climb quickly.

Hyde Park Savings Bank, a local bank in and around Boston is offering a 16-month CD that pays 2.00% APY. That's competitive when compared to the best 1-year cd rates. The bank is also offering a 30-Month CD that pays 2.40% APY.

Rates and ratings current as of 2/10/2010.

There is a low $500 minimum deposit to open either CD. The offer is only available to Massachusetts residents and can be opened in the branch or via phone.

Hyde Park Savings Bank operates six branches. As of Sept 30, 2009 it had $900 million in assets. The bank has 5 out of 5 stars (Superior) for its safety and soundness according to Bauer Financial.

Hyde Park Savings Bank has FDIC insurance as well as coverage via the Depositors Insurance Fund (DIF), something unique to Massachusetts. The DIF provides coverage and above the $250,000 in FDIC insurance currently available. DIF provides insurance on all deposits no matter what the limit on participating Massachusetts chartered savings banks. The fund currently has $300 million in reserve which should make you hesitate. There is surely more than $300 million in in deposits at Massachusetts chartered savings banks. Thus, while the DIF is a nice to have, it doesn't seem feasible that in the case of a banking meltdown it would be able to cover all funds in MA over and above the FDIC limits.

Still, with FDIC insurance, DIF coverage, and a superior bank rating, Hyde Park Savings Bank appears to be a pretty safe place to stash some cash.

An emergency fund is an ideal way to keep yourself out of debt. Many times, people use their credit cards when an emergency arises and then they continue to use them until they can barely make the minimum payments. As a result, they go deeper and deeper into debt simply because they used their credit card for an emergency. Here are some strategies for building your emergency fund and staying out of debt.

Start Now
The best way to start building an emergency fund is to start right away. You don’t have to wait until you get a windfall of money to begin an emergency fund. You can start just by taking a sandwich to work every day instead of going out to lunch all the time. You could save $20 or $30 each week by doing that and putting that money into your emergency fund. At the end of the month, you could have more than $100 in the fun. That’s enough to cover some emergencies even without a credit card!

Make Some Cuts
There are always things you can cut out from your budget to save money. Do you really need all those movie channels? Do you have to buy the DVD of a movie when it comes out instead of renting it? Do you have to go to Starbucks every day before work? Take a look at your spending habits and the luxuries you pay for and see what you can cut out and put towards your emergency fund. You might even find out that you don’t even miss those things after a couple weeks.

Keep Your $5 Bills
You have probably heard of Bank of America’s Keep the Change program. This concept uses the same idea but on a larger scale. When you use cash, keep any $5 bills that you have. When you get change at the gas station or wherever, take any $5 bills and set them aside for your emergency fund. Or, if you can afford it, do $10 bills instead. You will be amazed at how much you will save in just a couple months.

Set Aside Half of All Extra Money
If you get a bonus or some extra money for whatever reason, but at least half of it aside for your emergency fund. After all, this is money you didn’t plan on having in the first place so it should be no sacrifice using it for your emergency fund.

Saving for an emergency fund may give you less spending money in the immediate future, but it will save you hundreds or even thousands of dollars in interest in the long run. Instead of paying for your emergency with a credit card along with all the interest that accrues, you can simply pay for the situation with cash and be done with it for good. It is a good financial habit to get into, but it takes some work and motivation to get started.