Tantalizing rate offers have long been one of the most reliable asset-gathering mechanisms for financial institutions and some banks are now raising their rates to combat a slowdown in deposit growth.
The banks are hoping that they'll atract new customers who will then forget about these accounts after the promotion is over. This must be the hope of ING Direct. When the sale is over and the savings account rate returns to sub-par level, how many customers will keep their money in the account? Two other good examples of these types of promotions given by the article include:
- ETrade Financial Corp. - New customers earn 4.1 percent for 90 days. After that time, the rate would drop to 3.4 percent for balances over $50K, 2.6 percent for balances under $50K and just 0.30 percent for balances under $5K (assuming today's rates).
- National City Corp. - Money market account earns 4.5 percent for 180 days. New customers are required to open a Preferred Interest Checking account which has monthly fees if certain balances are not maintained.
The customers who pay attention and are willing to move their money will profit. The ones who forget and don't bother to move, will help the banks profit.
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