Tag Archives: mortgages

Thoughtful Thursday – Banks and Capital

piggybankBanks big and small are looking for ways to raise capital. Some are selling off assets, others are slashing dividends to shareholders and many of them are trying to get injections of cash in the way of new accounts.

In the old days, banks got new accounts with giveaways like toasters, but that disappeared in the days when the 5% minimum interest rate on savings accounts went away because interest rates had soared. Gone were the giveaways since people were only too eager to plop money into an account to earn interest at such high rates.

With rates at abysmal levels like 1% or 2%, banks are back to giveaways to try and entice new accounts. As I walk past the various branches on each corner in Manhattan (which makes you wonder why there are so many branches and banks when there is so little money nowadays), there are the enticements.

Earn up to $500 for referring a friend (Citibank)
Get 5% interest and a 5% bonus (Wachovia)

Sounds good right? Until you read the fine print and see that there are several “qualifying acts” that you have to do. Set up direct deposits, make payments online, use your debit card X number of times . . .

You get it. Hoops. Lots and lots of hoops to jump through to get your giveaway.

Here’s an idea for all those banks trying to raise capital.

Give your new account holders a decent interest rate with no strings attached. I know the banks are only getting 4% to 5% on new mortgages, but there are those ridiculous interest rates you charge credit card holders.

You’re the numbers people. Surely you can find some happy medium where your clients will earn a little more by savings and you’ll still make some money from credit purchases and raise capital?

Or if you can’t figure that out, just give me the damned toaster or maybe a nice blu-ray DVD player.

What do you think?