Savings Accounts

Spend your way to savings. That's the concept behind a new program called Way2Save that was launched last month by Wachovia Bank. It is being touted by some as one of the most innovative bank products in decades. And it has triggered criticism by others as a clever ruse to drive up overdraft fees. Way2Save is an automatic savings program that is triggered by debit card transactions.

Your 18-year-old is on the way to college, and you're tapping into that stash of money you've accumulated over the years in one of those tax-free college savings plans. ? But if you want to pay for more than room, board, tuition and books, you'd better check with the federal revenooers first. Buy the wrong thing and you could be hit with taxes and a 10% penalty on your earnings. ? Want to use the money to buy a laptop computer for the kid? Maybe you can, maybe not.

The Federal Reserve's cut in its benchmark interest rate Wednesday could put more money in your pocket -- or take some out. Or both. Figuring out how you're affected may be more complicated than usual. Here are questions and answers: Will I earn less on my bank savings? If you have money in interest-earning bank accounts or certificates of deposit, you can expect to be "as disappointed as Cubs fans," said Greg McBride of Bankrate.com in North Palm Beach, Fla.

One aim of the government's financial-system bailout plan is to make strong banks stronger while forcing weaker institutions to sell themselves or risk liquidation. Individual savers are abetting this strategy. Since Sept. 1, they have shifted significant sums into banks and out of thrift institutions, which tend to be smaller and therefore more likely to be perceived as vulnerable to financial trouble.

LIKE nearly half the American workforce, Pierre Randolph has no pension or 401(k) plan to look forward to in old age. Nonetheless, the 44-year-old maintenance worker is cultivating a retirement nest egg with the aid of his employer, outside the traditional pension system and the rules that govern it. "These days, you don't have a retirement plan unless you make a retirement plan," said Randolph, whose employer deposits his annual raise into an individual retirement account.

Millions of college seniors are interviewing for their first full-time jobs in preparation for stepping out of the hallowed halls of education and into the real world. And with it comes a world of debt. "These kids have it tougher than people did in the past," said Mike Sullivan, director of education for Take Charge America, a Phoenix-based credit counseling firm. "They are graduating with a lot more debt, but starting salaries are not that much higher."

People with money in the bank may soon help foot the bill to stabilize Wall Street. Many investment pros are betting that the Federal Reserve will cut its benchmark short-term interest rate this month to ease the credit crunch that has bedeviled financial markets. If that happens, rates on bank savings accounts and certificates of deposit also could see their first significant fall in more than three years.

Savers are beginning to feel the fallout from the Federal Reserve's interest rate cut: Yields on bank savings certificates fell over the last week at the fastest pace in more than four years. For borrowers, meanwhile, the cut has been a mixed bag. Rates on home equity credit lines are down, but rates on some mortgages have edged up. On the savings side, the average annualized yield on one-year bank CDs nationwide was 4.11% on Tuesday, down from 4.

Britain's chancellor of the exchequer, Alistair Darling, aiming to restore consumers' confidence in the nation's banking system, will extend a government-backed guarantee for cash deposits of as much as $70,000 (35,000 pounds) in all accounts. His announcement today will spell out details of how the government would reimburse savings in any failed banks. Darling said Sept. 17 that he would introduce the plans to stop a run on deposits at Northern Rock bank.

What will the Federal Reserve's interest rate reduction Tuesday mean for people who keep their savings in bank accounts? There's a good chance the answer to that question is very little. Typically, rates offered on savings instruments react quickly to Fed cuts, falling faster and further than rates on loans. But since the central bank started lowering its benchmark interest rate Sept.