Sudden 35% decline in bank checking rates -- Y2k related?greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I've noticed something with my bank that MAY be Y2k related.
For at least the past 3-4 years, my checking account had paid between 1.00% and 1.01% APR on all balances, as long as a $500 minimum was maintained. Over the past 3 months, the rate has dropped in steps and now stands at 0.65% APR -- a 35% decline. The bank gave no advance notice that this was in the offing.
When I contacted customer service, they said that "it's due to falling mortgage rates" which is patently absurd. Rates have been up and down several times the past few years, and long rates have been, in fact, rising since October. Then customer service tries to convince me to move some cash into long-term "investor services" products. I point out that her suggestion is irrelevant and, furthermore, those funds are not even FDIC insured.
I thought for a moment that this might be related to a recent post-merger money grab and reshuffling at this particular bank, but she insists not.
So, my theory is that the bank is bleeding capital and that it may be directly related to an increasing Y2k withdrawal rate. If so, this would be extremely disturbing, as the banks should actually be attempting to INCREASE deposits, not drive them away via ever more paltry returns. This bank is actually REDUCING the incentive to maintain anything but a token cash balance. It would appear that concentration on bottom line profitability is STILL outweighing the viability of the system as a whole.
Note that due to the speculative nature of this post, I prefer not to name the bank. Has anyone else seen returns on their bank checking or savings deposits SUDDENLY declining? Is this a general trend, or specific to this particular bank?
-- depositor (firstname.lastname@example.org), April 18, 1999
No such change here. Still a steady 1%.
-- No Spam Please (No_Spam_Please@anon_ymous.com), April 18, 1999.
NOTHING that Bankers do surprises me - they are driven by greed and the bottom line for their Directors. Expect to see fireworks in the near term.
-- Andy (2000EOD@prodigy.net), April 18, 1999.
Heard directly from the top man in the state's banking that they are seeing a dramatic shift to 6-month CDs, and long-term investments are being shunned. He said in response the banks will be offering financial incentives and promotions for longer-term choices. It was a surprise to hear him indulge that pat thinking would solve the banking problem or lure people to forget about Y2K and their money.
-- h (email@example.com), April 18, 1999.
I have noticed the little flyers I have been getting with every bank statement encouraging me to put my money in investment vehicles that are not FDIC insured and I, too, have noticed interest rates on savings and checking dropping and dropping lower and lower. That crap about mortgage interest rates is bull-oney.
I'm just glad the hubby and I work hard to spend every penny in the checking acct every month! ;-)
-- K (firstname.lastname@example.org), April 18, 1999.
OK, thanks everyone. So strange - rock solid for years and now dropping like a rock. I'll keep an eye out for the next statement and post again if these rates keep dropping. Meanwhile, I'm gonna find me another bank.
-- depositor (email@example.com), April 19, 1999.
There was a post on another site regarding interest bearing checking accounts. According to that post, they fall in the same category as "savings." Generally, savings accounts have a caveat in the fine print that your money may not be available for withdrawal immediately on demand, giving the bank some time to delay. Accordingly, I have changed my checking to a non-interest bearing account.
-- cautious (firstname.lastname@example.org), April 19, 1999.
Don't know - good observation - the banks have faced a large increase in what they have to pay out (recoding, fixing, testing) due to y2K - it's certainly likely they are trying very hard to remain "profitable" - and the people depositing checks are already cusomers, not likely to leave, and may not even notice (as I failed to notice!). I don't think changing interest reflects a change in saving rates, rather they are trying to reduce losses to uphold profits.
Anything they don't pay in interest, they keep as profit.
And that is just a guess......but certainly it isn't due to any change to (recent) mortgage rate changes.
-- Robert A. Cook, PE (Kennesaw, GA) (email@example.com), April 19, 1999.