Word: passbook
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Talman employees have a reason to be nice. They would be in deep trouble without the fierce loyalty of such customers to their old-fashioned passbooks. In American banks and in savings and loan institutions, an incredible total of more than $341 billion is sitting in accounts that pay a maximum of 5.5% interest. Those funds could currently be earning about 18% in a money-market account, 14.9% in a six-month savings certificate or 13% in a tax-exempt municipal bond fund. If the 5,000 savings banks and S and Ls in the U.S. suddenly had to start...
Government regulation limits the interest that can be paid on passbook accounts to 5.25% at commercial banks or 5.5% at savings and loan associations or mutual savings banks. Those ceilings are supposed to be eliminated by 1985, but plans to get rid of them sooner have foundered because of opposition from banks and S and Ls. Raising the interest-rate limit by just 1% would cost the troubled savings institutions an estimated $1.8 billion annually. This week federal regulators will discuss a proposal to double the interest rates on passbook accounts to 10.5% for banks...
...amount of money in passbook accounts has dropped by more than $50 billion since the beginning of the year; yet the mystery is why the total has not declined even more sharply and why anyone still keeps a substantial amount of money in a savings account. An avalanche of publicity tells about better-paying ways to save, and the banks themselves aggressively promote six-and 30-month certificates that offer three times more interest than passbooks. The new All Savers Certificates that will start being sold next month will initially pay 12.61% tax-free...
Today's high rates would not have been welcomed by anyone a few years ago, when the legal ceiling on interest the average saver could earn was the meager 5.5% paid on a passbook account at a savings and loan association or a mutual savings bank. The level is established by the Government. But financiers have been very creative in developing new high-yield deposits. Starting next month, for example, the new All Savers Certificate that was approved by Congress last summer will pay 12.61% tax-free for up to $1,000 in interest for an individual...
...against the U.S. dollar as recently as a month ago. But that does not seem to deter some savers who say that the risk of a currency decline is outweighed by the high interest rates they receive. Says Detroit Advertising Salesman Phillip Marien, who has a Canadian passbook account: "I don't worry too much about a currency devaluation. You can take money out at any time without a penalty...