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Path: utzoo!utcsri!dw
From: dw@utcsri.UUCP (Dave Wortman)
Newsgroups: net.consumers
Subject: caveat depositor
Message-ID: <1998@utcsri.UUCP>
Date: Fri, 24-Jan-86 13:04:02 EST
Article-I.D.: utcsri.1998
Posted: Fri Jan 24 13:04:02 1986
Date-Received: Fri, 24-Jan-86 13:49:16 EST
Distribution: net
Organization: CSRI, University of Toronto
Lines: 29


A local bank has been heavily advertising their "Investment Chequing Account"
that is touted as their best deal for savers. In their advertising for
this account they state:
"your balance over $3000 earns you an investment rate of interest.  That's
 the highest rate of any of our accounts."
[current rate is 8%]
"Your balance between $500 and $3000 earns you a savings rate of interest.
 That's higher than any of our other chequing accounts"
[current rate 6.5%, same as ordinary passboook savings account]
"With as little as $500 throughtout the month in your account, you can write
 as many cheques as you like without paying a processing fee."

In reading their advertisements one might reasonably assume that once
your balance exceeds $3000, you would earn 8% on the entire amount.

What the bank actually does, is in fact somewhat different:
- no interest at all (ever) on the first $500
- interest at 6.5% on the amount between $500 and $3000 even if balance
  exceeds $3000
- interest at 8% only on the amount of balance exceeding $3000.

If we look at a hypothetical account with a balance of $3001, the
effective rate of interest is really 5.4%, and the cost of the
"free" checking is about $33/year.
If you use one of these accounts primarily as a savings account,
then it only makes sense for balances in excess of $5166.
-- 
Dave Wortman