Friday, May 10, 2013

No Interest

Remember the days when the Savings & Loan institution offered "toasters" if you opened an account.  Now days money talks and financial institutions spend a great deal of advertising dollars with "teaser" rates to get you to open an account.  Jenna fell for this when a local financial institution offered $150 and a "teaser rate" to open an account with them.

I get various yields on money market, FDIC insured checking, and mutual fund money market municipal but all of them range from .07% to .15%.  So when an institution offers a rate of .5% on the first $100K (with some fine print restrictions) it's easy to get "sucked (or suckered)" in to opening an account.

But hold your breath...... read the fine print and understand "when it's too good to be true .... it's too good to be true".  Look for the catch and above all get out your calculator and determine the real benefit.  Example - good only for first year; restricted number of withdrawals; etc.

If you had the max of $100K the benefit of an extra .4% in interest is $400 per year. Add to that $150 incentive to open an account and you're not talking chump change - at over $45/mth.

That's the benefit - but what's the cost.  (1) The set-up paperwork. (2) Linking checking account to electronic transfers  (3) Establishing a long term banking relationship (for future need or leverage). (4) New account restrictions. (5) New online setup requirements (6) Different banking fees (7) Other banking features (overdraft protection; online banking etc.)

I have no interest - now in my account or in a new banking relationship.

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