dw@utcsri.UUCP (Dave Wortman) (01/24/86)
A local bank has been heavily advertising their "Investment Chequing Account" that is touted as their best deal for savers. In their advertising for this account they state: "your balance over $3000 earns you an investment rate of interest. That's the highest rate of any of our accounts." [current rate is 8%] "Your balance between $500 and $3000 earns you a savings rate of interest. That's higher than any of our other chequing accounts" [current rate 6.5%, same as ordinary passboook savings account] "With as little as $500 throughtout the month in your account, you can write as many cheques as you like without paying a processing fee." In reading their advertisements one might reasonably assume that once your balance exceeds $3000, you would earn 8% on the entire amount. What the bank actually does, is in fact somewhat different: - no interest at all (ever) on the first $500 - interest at 6.5% on the amount between $500 and $3000 even if balance exceeds $3000 - interest at 8% only on the amount of balance exceeding $3000. If we look at a hypothetical account with a balance of $3001, the effective rate of interest is really 5.4%, and the cost of the "free" checking is about $33/year. If you use one of these accounts primarily as a savings account, then it only makes sense for balances in excess of $5166. -- Dave Wortman