Is this bank saying “We don’t want your money”?

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ribonucleic
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Is this bank saying “We don’t want your money”?

Post by ribonucleic »

Rockland Trust Bank in Massachusetts is currently paying 0.01% on any non-CD savings deposit less than $50,000.

It also has this eye-opening caution:

“The APY for each balance tier in your Rockland Trust Money Market Savings Account will apply to the entire balance - for example, if you have a daily balance of $1,200,000.00, you will receive an APY of 0.01% on your entire balance.”

https://www.rocklandtrust.com/personal- ... rket-rates

I know interest rates are low now, but come on!

It makes me wonder if, for some reason, they don’t want new deposits at this time but are legally prohibited from paying zero interest.

[Bonus question: Is that “each balance tier will apply to the entire balance” typical? Or does it vary a lot?]
Soon2BXProgrammer
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Re: Is this bank saying “We don’t want your money”?

Post by Soon2BXProgrammer »

ribonucleic wrote: Sun Dec 27, 2020 9:09 am It makes me wonder if, for some reason, they don’t want new deposits at this time but are legally prohibited from paying zero interest.

[Bonus question: Is that “each balance tier will apply to the entire balance” typical? Or does it vary a lot?]
They can pay whatever they want, but they might have "advertised" that the account pays interest. So they have to pay something. But there are accounts out there that don't pay interest. I believe Citi offers one. (it isn't listed on the site, but it is an option)

As for your bonus question, it varies a lot, I would say paying different rates at different tiers is more standard. (my bank pays a lot on the first 500, then less after. they do this because it incentivizes the poor to not bounce checks, and keep $500 in the account, which actually lowers the processing costs for the bank).
Earned 43 (and counting) credit hours of financial planning related education from a regionally accredited university, but I am not your advisor.
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Kenkat
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Re: Is this bank saying “We don’t want your money”?

Post by Kenkat »

The yield on short term cash / on demand accounts like money market funds are effectively zero - for example, Vanguard’s money market funds range from yields of 0.01 - 0.04%, so other accounts are following suit. PNC, which I am most familiar with, is doing the same.

If you want higher rates, you will have to go with an online savings account, CDs or short term bonds.
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grabiner
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Re: Is this bank saying “We don’t want your money”?

Post by grabiner »

They have a template, which doesn't work well with the current low rates. When rates are higher, they might offer, say, 1.75% on balances up to $50K, 2% on balances over $50K, and 2.25% on balances over $1M. The template text clarifies what this means; if you have a balance of $1.2M, you get the 2.25% on the entire balance, not just on the portion over $1M. (Some banks use "blended" rates instead, so that the top rate applies only on the portion of money in the top tier; this allows the bank to advertise a higher rate than it actually pays on the whole account.)
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mindboggling
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Re: Is this bank saying “We don’t want your money”?

Post by mindboggling »

Chase has been telling me for years that they don't want my money. Finally I obliged and closed the savings account. Only checking now.
In broken mathematics, We estimate our prize, --Emily Dickinson
hilink73
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Re: Is this bank saying “We don’t want your money”?

Post by hilink73 »

Just for a comparison, here are the interest rates on saving accounts in Switzerland
https://www.vermoegenszentrum.ch/ratgeb ... insen.html

(4th column is withdrawal limit per period. 3rd column is the notice period in months, if you want to exceed the withdrawal limit.)

Here, it's not primarily about not wanting the customers monies but more due to the negative interest rates of the Swiss central bank (SNB).
mpsz
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Re: Is this bank saying “We don’t want your money”?

Post by mpsz »

I suspect that banks are much more interested in attracting time deposits right now than demand deposits. It smooths out their business... would you want to loan money for cars/mortgages against savings accounts (that can be emptied at any time, and lots of people are drawing on their savings right now due to world events) or deposits that are locked in for 5 years? Also with rates at rock-bottom (unless they go negative) they can lock in low interest rates paid out to their customers in case rates do ever go back up again.
ribonucleic wrote: Sun Dec 27, 2020 9:09 am It also has this eye-opening caution:

“The APY for each balance tier in your Rockland Trust Money Market Savings Account will apply to the entire balance - for example, if you have a daily balance of $1,200,000.00, you will receive an APY of 0.01% on your entire balance.”
I wouldn't read too much into this line, it's almost definitely part of the template on the website... "you will receive an APY of {{whatever the top rate is}} on your entire balance"
Dennisl
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Re: Is this bank saying “We don’t want your money”?

Post by Dennisl »

0.01% is standard for B&M banks. That’s what Bank of America is paying.
aristotelian
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Re: Is this bank saying “We don’t want your money”?

Post by aristotelian »

They are saying "we don't want to pay interest on your money."
MathWizard
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Re: Is this bank saying “We don’t want your money”?

Post by MathWizard »

Dennisl wrote: Sun Dec 27, 2020 4:26 pm 0.01% is standard for B&M banks. That’s what Bank of America is paying.
You mean my 0.15% is a GOOD rate? :shock:
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Re: Is this bank saying “We don’t want your money”?

Post by Jack FFR1846 »

They don't want your money.

My DCU savings pays 6.17% for the first $1000 in savings.
They pay 0.5% on checking if you activate overnight lending.

BoA is 300 yards from my local DCU B&M location. They probably charge me $2 for looking at them when I drive by.
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netrammgc
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Re: Is this bank saying “We don’t want your money”?

Post by netrammgc »

ribonucleic wrote: Sun Dec 27, 2020 9:09 am Rockland Trust Bank in Massachusetts is currently paying 0.01% on any non-CD savings deposit less than $50,000.

It also has this eye-opening caution:

“The APY for each balance tier in your Rockland Trust Money Market Savings Account will apply to the entire balance - for example, if you have a daily balance of $1,200,000.00, you will receive an APY of 0.01% on your entire balance.”

https://www.rocklandtrust.com/personal- ... rket-rates

I know interest rates are low now, but come on!

It makes me wonder if, for some reason, they don’t want new deposits at this time but are legally prohibited from paying zero interest.

[Bonus question: Is that “each balance tier will apply to the entire balance” typical? Or does it vary a lot?]
On the same tangent, wouldn't a large deposit at a small bank or credit union put their financial ratios at risk? Maybe they would deny in that case? For example my credit union has approx. 190million in assets. Hypothetically, if I won a billion dollar payout and deposited 500million, would they accept it? I don't play the lottery but always wondered what my credit union would do...lol
Last edited by netrammgc on Sun Dec 27, 2020 9:10 pm, edited 1 time in total.
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InvestorHowie
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Re: Is this bank saying “We don’t want your money”?

Post by InvestorHowie »

netrammgc wrote: Sun Dec 27, 2020 9:02 pm On the same tangent, wouldn't a large deposit at a small bank or credit union put their financials out of whack? Maybe they would deny in that case? For example my credit union has approx. 190million in assets. Hypothetically, if won a billion dollar payout and deposited 500million, would they accept it? I don't play the lottery but always wondered what my credit union would do...lol
For starters they might expand into 'The Mitten'.

Sorry, couldn't resist after reading your location as 'Yooper'.
Time is your friend; impulse is your enemy. --John C. Bogle
netrammgc
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Re: Is this bank saying “We don’t want your money”?

Post by netrammgc »

InvestorHowie wrote: Sun Dec 27, 2020 9:08 pm
netrammgc wrote: Sun Dec 27, 2020 9:02 pm On the same tangent, wouldn't a large deposit at a small bank or credit union put their financials out of whack? Maybe they would deny in that case? For example my credit union has approx. 190million in assets. Hypothetically, if won a billion dollar payout and deposited 500million, would they accept it? I don't play the lottery but always wondered what my credit union would do...lol
For starters they might expand into 'The Mitten'.

Sorry, couldn't resist after reading your location as 'Yooper'.
Haha. Live in DFW now. But if I win that hypothetical lottery, I may have to relocate back. ;)
hi_there
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Re: Is this bank saying “We don’t want your money”?

Post by hi_there »

"Is this bank saying “We don’t want your money”? "

Due to coronavirus related economic impact, many businesses, individuals, and even institutions like universities have taken outsized volumes of loans this year. Banks are keeping tight control of their leverage ratios and are not going to be aggressive in attracting deposits by paying more than the 0.13% repo rate. So, in some ways yes, 0.15% is a good rate.

It gets problematic when we become like Switzerland or other countries where banks are paying negative interest on deposits. In this case, people might do weird things like withdraw all their cash and put it in their mattress or something...
Kelly
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Re: Is this bank saying “We don’t want your money”?

Post by Kelly »

I asked a similar question here viewtopic.php?f=10&t=329846&p=5595463#p5595463

They don't want it.
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