Banker says: Hey, stop saving so much!

[Joan.of.the.Arch]

Ha-ha, rate chasers are irking a local bank which has been offering 4% interest on checking with the stipulation of 12 debit card uses per month. My DH dropped into said bank to ask about the account (better than CD's for sure!). Surprisingly, he was told that the rate would be dropping back to 3% next month. The banker said the reason was that too many people were using those debit cards for nothing more than 12 little cups of coffee per month, leaving their checking accounts to bulk up and earn plenty of interest. Well, yeah, that is about what we were going to do. The nerve of some people, trying to save some money!

But seriously, I figure when a bank offers interest so much higher than everyone else they are probably in serious need of expanding their deposit assets. I guess they are lowering the rates because they are closer to having the new deposits they wanted.

[jpg7n16]

That reminds me of what the gov. was saying when they did the whole stimulus - and everyone used the money to pay down debts and save.

The gov was like, "No - don't do that! Spend more than you save again. Businesses need you!"


Coffee? Shoulda done sticks of gum at Wal-Mart

[minnie1928]

But seriously, I figure when a bank offers interest so much higher than everyone else they are probably in serious need of expanding their deposit assets. I guess they are lowering the rates because they are closer to having the new deposits they wanted.

I used to work at a community bank in a position that allows me to say that you are completely right. It can also be a good way to expand their client base. However, there's also the risk that some of their own "cheap" deposit accounts will move to this more "expensive" account. Thus cannibalizing their own deposit base.

Also, they make more money on the debit transactions that have a higher price tag.