Word: passbooks
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...interest rates. Banks and savings and loan associations across the U.S. unleashed massive advertising campaigns to induce customers to sign up early for the new All Savers Certificates. The A.s.C.s were devised to help ailing S and Ls attract business by offering higher interest rates than those given on passbook accounts and a partial tax exemption on yields. Banks and S and Ls have been promising depositors annual interest rates of 20%, 30% and even 50% until Oct. 1, when the All Savers accounts officially start...
...reason for the cash flow is simple: S and Ls pay only 5.5% annually on passbook accounts, while money-market funds last week were yielding 16% and more per year. The A.s.C.s, which require that money be deposited for one year, were legislated to aid the S and Ls in their attempts to win customers back from the money funds...
...border towns have long driven into Canada to buy gasoline at bargain prices, at times 40% less than at home. Lately they have had another reason for crossing the border: interest rates paid by Canadian banks are much higher than those obtainable in the U S A regular passbook savings account in Canada now earns up to 19% interest, while federal law holds U.S. commercial banks to a miserly 5.25%. An account in Canada is even more attractive to an American with large deposits. Banks there pay 19% interest and up on accounts of varying sizes that are left...
Even before these reforms, banks were trying to attract new savers with a variety of high-yielding time deposits and money-market certificates. These give much more interest than a passbook account; last week a six-month certificate paid 15.9%. But they usually require that the depositor keep his money in an account for six months or longer in order to earn the full interest...
...take away his business. Like many small, rural bankers, Smith borrows low and lends low to customers he knows. He can keep his rate below the rate of other banks because 35% of his deposits are in non-interest-bearing checking accounts, and 10% are in 5¼%-interest passbook accounts. Last winter another nearby bank installed an automated-teller machine, but Smith notes that it is hardly ever used. Says he: "What all this is telling me is that you can do a lot of things to push around figures, but you can't change human nature that...