Magazine article American Banker

No Rush to Cut Money Market Minimums

Magazine article American Banker

No Rush to Cut Money Market Minimums

Article excerpt

CHICAGO -- Banks are in no hurry to lower the minimum deposit required on money market accounts paying out near-market interest.

In a recent survey, two-thirds of the banks maintained the old minimum of $2,500, while almost all the remainder lowered their threshold to the $1,000 allowed by the Depository Institutions Deregulation Committee as of Jan. 1. A few moved to $1,500.

The minimums act as a trigger for all sorts of payments and charges. Banks usually pay market rates when deposits are above the minimum, but pay no interest, or assess charges, if the amount falls below it.

Biff Motley and the Financial Products Group surveyed 282 banks across the country during the week of Jan. 14 and found that 64.5% held their minimum deposit at $2,500, 32.3% lowered it to $1,000, 1.8% dropped it to $1,500, and 1.4% actually increased it.

Not surprisingly, larger banks facing more competition for deposits led the way on the decreases. …

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