After decades of living on credit, Americans are beginning to reacquaint themselves with old-fashioned sav- ings accounts.

Banks across Central Oregon are noticing an increase in interest from customers looking to put money in CDs, savings or money-market accounts, even if those accounts are paying historically low rates of return.

Americans aren’t suckers. They are just looking for safety, rather than putting money in the up-today, down-tomorrow stock market while they ride out the recession, bank officials say.

“People are pretty much hunkering down a little bit through this economic downturn, as they’re calling it, and tending to sit on their money a little bit more,” says Megan Palmer, lead universal associate at Umpqua Bank’s Wall Street branch. “We are noticing a lot more interest-bearing accounts being opened. Definitely a ton of phone calls regarding interest rates.”

Indeed, the savings rate is up big across the country.

The government reported last week that Americans saved on average 2.9 percent of their after-tax income during the fourth quarter of 2008. That is up significantly from the 1.2 percent Americans saved in the third quarter of 2008.

And Americans are in no mood for risk.

“The flight to safety has been huge,” says Debbie Amerongen, executive vice president and chief deposit officer for Bend-based Bank of the Cascades. “Seeing the number of people that have bought (zero-interest U.S.) Treasuries is a great example of that. The number one thing people want is to make sure those funds are safe. And they should.”

FDIC-insured accounts, which insures covered interest-bearing accounts up to $250,000 and noninterest-bearing accounts up to $1 million, are increasingly popular.

Columbia River Bank, for example, saw a net gain of 1,100 deposit customers in 2008, says Tom Van Hemelryck, Columbia River Bank’s business banking team leader in Central Oregon. A good portion of those were from Central Oregon, he says.

“(Customers) have become very aware of FDIC insurance and wanting their deposited funds to be covered,” Van Hemelryck says. “We have seen, I believe, a migration of funds coming out of brokerage accounts that are not covered by federal insurance and coming back to the bank.”

Customers also are often opting for more liquid accounts in which the account holder is free to withdraw funds at any time.

CDs, or certificates of deposit, generally offer higher interest rates than traditional savings or money-market accounts.

But most CD accounts will penalize a customer for withdrawing money from an account before the term of the CD is up.

“The yields on CDs are so low right now that you can make just as much money in a savings account,” says Steve Green, investment consultant at Wells Fargo Investments and the assistant manager at the downtown Bend branch. “And because there is so much uncertainty, a lot of people aren’t willing to tie up their money. If they are doing CDs, it is generally very, very short-term CDs, anywhere from about three to nine months.”

People who are depositing heavily into savings accounts aren’t doing it to get rich.

The interest rate a bank pays is tied to the federal funds rate. Like that rate, savings account interest rates are at historic lows, though some banks often offer higher temporary promotional rates to try to lure in new customers.

Cash-starved banks, in particular, will offer the highest promotional interest rates, Green says.

Despite the generally low rates, though, Green says savings accounts are a solid investment in a shrinking economy and deflationary environment.

“What I tell a lot of my clients is that if you are sitting in cash and you are earning a half a percent to 1 percent on a savings account, really right now you are earning 4 percent,” Green says. “Because the economy is shrinking and the dollar is strengthened. You can buy more for your money than you could three years ago or two years ago.”

Saving does have a downside, however.

After all, spending is the fastest way out of a sputtering economy, and the more people save, the less they spend, Green says.

But savings are good in the long term because they help banks make longer-term capital investments, Green says.

Americans’ savings rate actually dipped in 2005 into negative territory, meaning that, on average, Americans spent more money than they made. Americans’ low savings rate has been pegged by some experts as a top culprit for the recession.

“If people are putting everything on a credit card and then unable to pay that credit card or a loan or something like that, it might help the economy in the short term,” says Umpqua’s Palmer. “But in the long term, it proved to be not so beneficial to anyone.”

Samples taken Feb. 5.

Type of accountBank of AmericaBank of the CascadesColumbia River BankUmpqua BankWells FargoSavings account0.2%

($25 minimum)0.2%

($100 minimum)0.18%

($200 minimum)0.1%

($100 minimum)0.05%

($100 minimum)Money market1%

($25 minimum)0.25%

($1,000 minimum)1.04%

($100 minimum)1%

($1,000 minimum)0.05%

($100 minimum)CD1.99%

($1,000 minimum, 12-17 months)1.75%

($300 minimum, 12 months)2.21%

($500 minimum, 11 months)1.5%

($1,000 minimum, 12-17 months)1.25%

($2,500 minimum, 9 months)

Note: Additional fees often apply. Most banks tier their interest rates, which means the more money you put into an account, the higher interest rate that is paid.

Source: Respective banks