About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Why Savers May See Some Better Deposit Rates in 2013


Why Savers May See Some Better Deposit Rates in 2013

Most savers probably don't know much about the Transaction Account Guarantee Program (TAGP). This program doesn't affect most of us who make sure their savings are earning interest. However, there are some who have large savings and are primarily concerned about keeping all of that money FDIC insured. This is especially the case for businesses which may have millions of dollars in transactional accounts that are used for things like payroll. This is where TAGP comes in. It provides unlimited coverage of deposit insurance for noninterest-bearing transaction accounts. The original TAGP started during the financial crisis, and it was intended to reduce the risk of bank runs. It has been extended a few times. Now this latest TAGP is scheduled to expire on December 31, 2012.

The expiration of TAGP may be good news for savers. In short, it may encourage small banks to raise rates to maintain deposits.

According to this BauerFinancial Jumbo Rate News, when TAGP expires "there could be upwards of $1.5 trillion that could be withdrawn in search of either FDIC insurance or interest/dividends, or both." Not all of that money will be leaving banks. As the article describes, $1.3 trillion of this money is in large banks, many which are considered "too big to fail". So most of the pressure to raise rates to maintain deposits will be on small banks.

That's one reason banks have been fighting to extend TAGP. This commentary at the American Bankers Association website claims that the expiration of TAGP will put community banks at a competitive disadvantage with the large banks.

The banking lobbyists "appear to have lost this battle" according to this WSJ article. They were not able to get the TAGP extension into legislation that passed the House last week. The article warns that the lobbyists will try again following the November elections.

No Change to the $250K Standard Maximum Deposit Insurance Amount

It's important to note that this expiration of TAGP has no effect on the $250K standard maximum deposit insurance amount. This was made permanent in July 2010. So if you receive a notice from your bank that mentions the end of a type of deposit insurance, it only affects those who have over $250K in checking accounts that pay no interest.

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Anonymous/Paoli   |     |   Comment #1
Am I actually reading some "almost" good news for savers??  Even if it doesn't turn out, at least it gives us some hope for the future.  Thanks Ken.  This can actually be a "no Mylanta" morning for me!  :)
Anonymous   |     |   Comment #2
To Anonymous/Paoli #1,

And how is this a good news?
Now, we, the regular savers will have more competition for CDs, MM, savings and any short term interest paid by the banks.
When $1.5 trillions dollars start to search for better returns, we can not compete with that money inflows into the interest paying instruments,  It is a more bad news for the savers.
Anonymous/Paoli   |     |   Comment #3
#2  Creeps!  Can't you let me live in my "Let's Pretend all is Well" for at least one day?  Sometimes intelligent thinking brings on more need for Mylanta.  Ken posted "may be good news for savers" and I will just focus on that if you don't mind.  Maybe you are just someone who has a negative view of life and what you are posting will not affect savers.  We just have to be sure we are "first in line" at the banks if rates ever go up!  Thanks for warning me, tho.  I will keep the car gassed up and watch all out of town banks when the time is right.
Anonymous   |     |   Comment #4
Everythings in uncharted territory, but we have a lot of negative mean spirted people posting.  They can't get enough of goverment conspiracies, bank high jinks, whatever makes them feel happy about their bitterness and negativity.
Anonymous   |     |   Comment #7
I agree with #2, he/she is correct on the observation of the future interest rates.
Don’t forget, now the banks will have to insure the $1.5 Trillion  and pay FDIC insurance on all that money just for seating at the banks. Guess who will pay for it, you and I, in even lower interest rates.
The savers lose again.
#4, man up and stop being so sensitive, reality always prevail, #2 was not mean to anyone.
Anonymous   |     |   Comment #13


Dear Anonymous/Paoli,

>> #5/6  You carry on like a raving manic

Actually it is you - Paoli - who was/is a raving manic!

Remember the episode where you staked a claim over your husband's Individual Retirement Account, while he was still alive, and (presumably) sane?

After I pointed out multiple times you cannot claim his IRA account, you still kept raving about how you had an "arrangement" where whatever was your was yours and whatever was his was also yours?

That was a classic behavior of a raving manic.

I hope you get better from your "condition".

Yours Truly,



Anonymous   |     |   Comment #15


Dear Anonymous/Paoli,

>>Now go play with your pet rattlesnakes and leave me alone!


Err ... Cannot do that ... On four counts.

1) I don't have a pet rattlesnake

2) You are alone actually, but are seeking company on this blog, and because of your obvious "charming" personality, you're getting plenty of it!

3) You are way more fun than rattlesnake. ... Why? becaue rattlesnake is logical that it hunts the prey and stays away from danger.  You do neither!

4) I guess "playing" you is more fun, that playing with a reptile (although I've never played with one).


Yours Truly,

Anonymous/Paoli   |     |   Comment #17
#15  The most important lesson we can learn in life is "Know Your Enemies".  You can hide behind all the avatars and anonymous numbers you want but you have had one intent since I came on here.  That is to drive me off.  You can't but now that I know what you are, I know how to avoid you.  You may as well get a rattlesnake because your days of taunting me are over.
Anonymous   |     |   Comment #16
And she rambles on again and again.  Maybe she'll get tired and need to take her afternoon nap soon.  Then her spouse can hide her PC.

Anonymous   |     |   Comment #20
If she stopped posting her nonsense then this bog would be so boring.  Interest rates certainly are nothing to talk about.  And everytime someone tries to talk about legimate alternative investments she jumps up and down in protest.  She needs to go in the hills of Kentucky.
Bozo   |     |   Comment #22
Politics aside, I am always the eternal optimist. History does tend to repeat, and longish (5 years plus) CDs should "eventually" reward those with the laddering philosophy. This is, no doubt, a dark period for fixed-income types. Little to brag about, as it were. But stuff turns, it always does. The point of fixed-income is, and always was, to provide  "an anchor to windward" for one's portfolio, not to throw off a huge real return (over inflation). Risk is taken on the equity side of one's portfolio.