You’ve probably noticed your savings account earning nearly no interest.

You may have dismissed it if you’ve never relied on that interest for income. But if you’re a retiree, manage a town or otherwise expect to make money off the cash you’ve saved, you might be asking, “What’s the point?”

Low interest rates are meant to spur economic growth by helping businesses keep their costs down. With more savings, the idea is that those businesses can hire more employees or make new investments.

Low interest rates, however, also have a downside for people counting on some level of return on their bank accounts.

What is playing out across the nation is also true in Maine: Low interest rates are proving bad for savers and good for the few people able to borrow money.

LOSING REVENUE

Norridgewock Town Manager Michelle Flewelling has been dismayed the last several years with bank statements for the town’s certificate of deposit.

In 2007, Norridgewock earned more than $38,000 in interest on its undesignated fund balance kept in its account.

By 2010, failing interest rates dropped the return to $3,400.

“That is one area that’s taken the most surprising drop you’d ever think of,” Flewelling said.

Her town has since moved its money into a checking account, which earns more in interest than a certificate of deposit.

A basic certificate of deposit at TD Bank has an annual percentage yield of 0.40 percent for an 11-month term. Some banks, including Ally and Aurora, are offering higher rates, but only around 1.2 percent.

MAKING DOUGH

One small business is benefiting from the low rates.

“Certainly higher interest rates would make it harder to pay the mortgage,” said Matthew DuBois, who co-owns a bakery-flower shop in Skowhegan, The Bankery & Skowhegan Fleuriste and Formalwear.

The Bankery is less than four years old but has grown from two to 14 employees and added the flower shop. Recently it’s seen yearly growth of at least 25 percent, DuBois said.

A 6 percent interest rate on a 20-year loan from Franklin Savings Bank has helped the business, he said, but it’s only one part of financial success.

Having a profitable business also lies in following other basic best practices, DuBois said.

He and business partner Michael Hunt have set five- and 10-year goals for their business. They ask clients what they want and offer it, and they purchase local flowers or baking supplies when possible. They steadily chip away at loans and credit card debt as well.

RATES NEAR ZERO

Interest rates have been dropping since 2008, but on Aug. 9, Federal Reserve board members said they would continue to hold interest rates near zero for the next two years.

Keeping interest rates low is meant to make it easier for businesses and individuals to borrow money, said Jim Batey, executive director of the Somerset Economic Development Corp.

It appears, however, that in these “gut-wrenching times,” people still aren’t borrowing, Batey said; and people, particularly retirees, who relied on certificates of deposit or savings accounts for some of their income won’t make money for a while.

“It is very difficult for a small business to borrow money for lines of credit, for working capital, because the terms and credit standards are so high that many of them don’t qualify,” he said.

Fed chief Ben Bernanke proposed no new steps to boost the economy in a speech in Jackson Hole, Wyo., on Friday. Instead, he pressed Congress to do more to encourage expansion and hiring.

LOW DEMAND FOR LOANS

David Cyr, executive vice president at Skowhegan Savings Bank, has been in the industry for 25 years and said he’s never seen interest rates so low.

Though the ultra-low rates are meant to encourage borrowing, current demand for loans is flat.

“We’re not seeing a lot of increased need or actual purchase transactions, but there’s still a lot of refinancing,” he said.

Part of the problem is psychological. People are “a little bit hesitant to make a big purchase,” he said, mainly because they don’t see governments in the U.S. and Europe fashioning a clear plan for their economies.

Without clear national goals, people have no confidence the economy will improve, he said.

Still, keeping interest rates low is better than raising them, Cyr said. For example, just a 1 percent drop in an interest rate can help someone buy a home.

Cole Palmer of the Kennebec Valley Council of Governments, based in Fairfield, said the low demand for borrowed money is because of an unemployment rate above 9 percent and higher food and energy costs.

“They’re thinking, ‘If unemployment is so high, my job could be next,’ ” he said. 

Morning Sentinel Staff Writer Erin Rhoda can be contacted at 612-2368 or at: erhoda@centralmaine.com