The Bank of New York Mellon plans to begin charging a fee for its big custodial customers to park cash at the bank, according to the Wall Street Journal.
The Bank of New York Mellon plans to begin charging a fee for its big custodial customers to park cash at the bank, according to the Wall Street Journal. It is doing this in response to a tidal wave of cash which was deposited at the bank over the last couple of months in the face of a slowing economy and the potential debt crisis. Because of the velocity and size of the deposits, the bank has not been able to invest the money. In addition, the bank expects that some of the cash will be withdrawn.
"Past history shows that once the storm passes, these deposits quickly return to the markets," BNY Mellon said. It cited the U.S. debt ceiling debate and the Greek debt crisis as having spurred clients to deposit more cash.
Bank of New York is the largest custodial bank in the United States. The bank will charge 0.13% plus an additional amount depending on the one year Treasury rate for accounts holding an average monthly balance of $50 million per client relationship.
So, essentially depositors are earning a -.13% just to put money in the bank. Is this analogous to consumer banking? Not exactly but the general dynamics are the same. Banks are awash in record amounts of cash as consumers shun the stock market. In addition, they are having trouble lending the money via mortgages, credit cards, etc. as lending standards have tightened and housing demand has dropped. With so much cash available and so little to do with it, banks have little incentive to inrease rates. Many checking accounts already pay 0% and average savings accounts are paying near 0.50% (although top savings account rates are near 1%). If the country dips back into a double dip recession, as seems possible, we could see savings rates dropping even further and banks continuing to raise fees for customers to park money and utilize their services.
We all know that savings account rates have been on a path to nowhere over the last three years since the start of the global financial crisis. Back in 2007, savings rates were as high as 6% but now the average is closer to .50% APY. But with a little bit of research, you can still find savings accounts at 1% APY and above - some even higher than 1.50% APY.
We all know that savings account rates have been on a path to nowhere over the last three years since the start of the global financial crisis. Back in 2007, savings rates were as high as 6% but now the average is closer to .50% APY. But with a little bit of research, you can still find savings accounts at 1% APY and above - some even higher than 1.50% APY. While that doesn't sound like much, it's still a full percentage higher than the national average. So, looking at our rate database, here are a few ideas:
National Online Banks
CNB Bank Direct - CNB pays 1.15% APY on an online savings account, the highest rate in the country according to the BestCashCow rate tables. It requires $1 to open and and start earning interest. The online bank is a division of The Citizens National Bank of Bluffton.
American Express Savings - Personal Savings from American Express is offering a 1.00% APY online savings account. The bank has consistently received positive reviews from users and generally keeps its rate in the top 10. It's easy to open an account and there are no minimum balance requirements.
Aurora Bank - Aurora bank pays 1.06% APY but it requires a minimum balance of $100,000.
Local Banks and Credit Unions
You can also find some above 1% savings account rates by taking a trip to your local bank. Here are some of the offers we found:
While I realize most of you do not live near these banks or aren't eligible to join the Aflac credit union, almost every state and zip code in the country has a bank that is paying significantly above the national average. Click the "Savings" tab above to view savings account rates in your local area.
There no reason to stick with a low rate when FDIC insured banks are offering to pay more. Help yourself and your pocketbook by looking to get more for your savings.
Many banks and credit unions that support military personnel and their families are announcing that they will continue to honor direct deposits and other cash advances if there is a government default.
Many banks and credit unions that support military personnel and their families are announcing that they will continue to honor direct deposits and other cash advances in the case of a government default.
Pentagon Federal Credit Union has announced that military or civilian employees and retirees of the federal government, as well as Social Security recipients will receive their regularly scheduled payments in August even if the government defaults. Members will have to repay these advances within 90 days of when the advance was made.
Navy Federal Credit Union is offering a similar program to all of its members. Navy will also have counselors available to work out loan payments should its members have trouble.
Although not a credit union, USAA is providing the following support:
A one-time payroll advance for payroll scheduled to be deposited on August 15 for active duty military personnel, including activated Guard and Reserves.
Waive property and casualty insurance policy late fees or bank nonsufficient fund fees and suspend nonpayment cancellations for members who are on active duty, including those actively serving the Guard and Reserve, for 30 days where legally permitted.
For non-active members, USAA will offer special payment arrangements on loans, waiver of credit card late fees, refunds for non-sufficient funds and overdrafts, lines of credit increases.
If you are a government employee who thinks your pay check might be in jeapordy, check with your agency credit union to see if they will advance funds or be flexible with your payments.
We all know that savings account rates have been on a path to nowhere over the last three years since the start of the global financial crisis. Back in 2007, savings rates were as high as 6% but now the average is closer to .50% APY. But with a little bit of research, you can still find savings accounts at 1% APY and above - some even higher than 1.50% APY. While that doesn't sound like much, it's still a full percentage higher than the national average. So, looking at our rate database, here are a few ideas: