Someone from my bank called recently offereing to up the interest rate on my savings account from just over 1% to 4%. I asked him what was the catch and he said none and that I didn't even have to maintain a minimum balance. Claims this is the latest trend in banking.
We have a meeting set for a few days from now. Since when did high liquidity and high interest rates go hand in hand? Too good to be true or am I missing something?
Definitely seems too good to be true. The highest rate on BankRate.com right now is 1.4% APY.
If it turns out it's not too good to be true, let us know where you bank! :-)
--Bill
If they need a meeting to increase the interest rate on a savings account, something must be involved needing your signature.
I have seen some high interest rate accounts advertised, but it was a tiered interest rate plan.
the first couple thousand were at the high interest rate, higher amounts fell back down to reality.
2) Look for some kind of teaser rate that is guaranteed for a relatively short time in hopes that you won't move your money when the rate drops back to or below market rates.
There is no such thing as a free lunch.
As the yield on the 10 year T-Note is only 2.61% I don't see how your bank can afford to pay 4% on savings.
Please provide the name of your bank and more information when you have it.
Deparment stores have sales to attract customers, hoping you will like ALL their merchandise, and do your shopping there in the future. No signature required, just attend the free lunch and listen to the sales pitch. As others have noted here, check the merchandise before you plunk down your cash.
There must be some way the bank makes money off the limited number of "high interest" accounts. Banks are tough to decipher from their financial statements, but consider that a bank avergages interest paid over all its deposits. Likewise for the interest it receives.
One thing to be sure to look up and verify is what T-Bill rates will be one year from now.
on 8/20/10 4:14 PM terrable said the following:
Must be the selection of different products. You will get the hard-sell. Sign nothing on first day. Report back.
Indeed, it is the latest trend among banks... which need to capitalize quickly.
You can check your bank out at
I can't find any savings accounts there, and the highest MMA is far below
4%. What are you talking about?
Didn't hear from you since, I guess it was too good to be true.
What I'm talking about is that when banks are desperate for money in order to make up capital requirements, they start offering interest rates much higher than the market average. It often fails to achieve its needs and its final demise typically involves the FDIC having to pour in much more money than otherwise, spreading weakness throughout the banking system.
In fewer words: 4% is too good to be true.
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