Word: passbook
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Early last month, Government agencies raised by a half-point the ceilings on interest for most types of small savings. On ordinary passbook accounts, banks are now permitted to pay 5%, and savings and loan associations 5¼%. From there, the bank ceilings rise to 5½% on deposits made from 90 days to one year; 6% on one-to 2½-year money; and 6½% on 2½-to four-year deposits. On CDs running for four years or longer, banks can now pay anything they please; the Federal Reserve Board requires only a minimum deposit...
...four years will earn interest each quarter at a rate of a half-point below what the bank had to pay the previous quarter to attract $100,000 CDs. The rate this quarter is 8.11%; it can go either up or down from there, but never below the 5% passbook rate. Philadelphia's First Pennsylvania Banking and Trust Co. offers an "inflation-proof" $1,000 CD that will pay 7½% to 10% interest, with the exact amount to be determined by how fast the consumer price index rises...
...residential construction. Such institutions may well receive a net in flow of only $20 billion during 1973, v. $33 billion last year; in California, New York City, Washington, D.C., and some other areas, they have already suffered a net outflow. S and Ls typically pay 5% interest on passbook accounts and 6.5% on certificates of deposit that must be held for a specified time. Sophisticated savers are turning instead to Treasury bills that pay nearly 7%; commercial paper, a form of corporate lou, that yields 7.5%; and commercial-bank certificates of deposit, that pay almost...
...many people, the bonds at present appear to be as sound an investment as any in the land. The stock market has been sluggish; the glitter of go-go mutual funds has long gone; bank interest rates on ordinary passbook savings accounts have been at 5% or lower. If the President's freeze cools inflation, the savings bond rates will look even better. Insecure about the future, many small investors-particularly middle-aged blue collar workers-are seeking financial refuge in the Government's securities...
Several commercial banks on the West Coast and elsewhere have also reduced the interest that they pay on passbook savings accounts from the legal limit of 4½% to 4%. Those reductions could increase bank profits by 10% or 12% a year. Still, the trend may be slow to spread. In many cities, including New York, competing mutual savings banks and savings and loan associations show no sign of reducing their 5% rate on passbook savings...