Newspaper article Sarasota Herald Tribune

Biggest Banks Paying Least on the Customers' Deposits

Newspaper article Sarasota Herald Tribune

Biggest Banks Paying Least on the Customers' Deposits

Article excerpt

A TOP OFFICIAL WITH THE FED-eral Reserve Bank of Dallas spoke in Sarasota last week about getting rid of the concept of "too big to fail" in U.S. banking.

Now, data suggest that those big banks are too big to pay, too.

The nation's top five banks pay less than one-third of the average interest rate on deposits compared with smaller banks, according to new research by Market Rates Insight.

The average interest rate the top five banks offer on deposits is 0.19 percent, while banks with less than $1 billion in assets pay an average 0.50 percent.

MRI said the gap between the interest rates from the big five and the smaller banks is greater with liquid accounts, such as checking, savings and money market, and on short-term certificates of deposits up to one year.

"The analysis also shows that the decrease in interest rates on deposits is consistent with the asset size of institutions and not a unique phenomenon shared only by the largest banks, which means that a more precise statement is: The bigger the institution, the lower the interest on deposits," said Dan Geller, an executive vice president at MRI.

The rate gap was sharpest in savings accounts: The big banks paid an average 0.01 percent, while smaller banks were at 0.15 percent. For checking accounts, the range was 0.01 percent for the top five banks and 0.10 percent for smaller banks. On money market accounts, the big guys paid an average of 0.05 percent, versus 0.14 percent at smaller banks.

On CDs up to one year, the top five banks paid an average rate of 0.05 percent, compared with 0.29 percent at the smaller banks.

Geller didn't name names, but the five largest banks by assets in the third quarter of 2012 were JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and U.S. Bancorp.

Urban Trust changes prepaid cards

Under pressure from regulators and consumer groups, Urban Trust Bank has changed its debit card program that some said might have skirted state usury laws.

Lake Mary-based Urban Trust, which operates branches inside Wal- Mart stores in Bradenton, Osprey and Palmetto, eliminated the overdraft protection feature on prepaid cards to be used by the CheckSmart chain of payday stores. …

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