Relationship Banking Eliminates Bitter Pill of New ATM Fees

by tom 3. October 2011 10:09

Last week, we noted that Bank of America had announced a new $5 monthly fee for ATM transactions, and that fee announcement has generated a flood of queries from customers. Bank of America is giving some customers immunity from ATM fees – all they have to do is deepen their relationship with the bank.

According to a report in the Phoenix Business Journal, if you hold a mortgage, credit card, or investment account with Bank of America, chances are you will be immune from newly imposed fees:

“BofA (NYSE: BAC) is instituting a new $5 per month debit card fee for banking customers at the beginning of next year.

“But bank officials say if a customer has a mortgage or credit cards through BofA, or investments via Merrill Lynch, they are likely to immune from the new debit fees as well as recently instituted monthly maintenance fees on banking accounts.”

Clearly, despite new profit pressures from Dodd-Frank and other economic factors, banks are still striving  to promote a larger share of wallet through relationship banking, Customer Loyalty still pays off in the end.

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Banking Trends | In The News | Fees

A Sea of Fees–Bank Fees are Hitting All-time Highs

by tom 29. September 2011 17:48

In an effort to recoup profits in the current economic downturn, banks are continuing to raise fees across the board. This from the New York Times yesterday:

“Average fees for withdrawals from out-of-network automatic teller machines, as well as fees for bounced checks, have hit new highs, according to a newly released study from Bankrate.com. The average fee that banks charge noncustomers for using their ATMs is now $2.40, up 3 percent from last year. The average bounced check fee, meanwhile, is now $30.83, a record. Banks are also slowly abandoning free checking accounts, although fees can still be avoided by arranging for direct deposit or keeping a minimum balance in the account. For non-interest-bearing accounts, the average monthly fee is $4.37, up from $2.49 last year, and the balance needed to avoid it averages $585, more than double the $249 balance from a year ago. For interest-bearing accounts, the average fee jumped to $14.15 from $13.04 last year. The balance needed to avoid the fee rose to $5,587, from $3,883.”BofA_atms

This was followed by today’s news that Bank of America will start imposing a $5 monthly ATM fee starting next month. This on top of news we reported here earlier that Wells Fargo is going to start experimenting with $3 ATM fees.

“Paying to use a debit card was unheard of before this year and is still a novel concept for many consumers. But several banks have recently introduced or started testing debit card fees. That's in addition to the spate of other unwelcome changes checking account customers have seen in the past year.”

The competitive landscape in banking is changing with the times, and Market Rates Insight’s research will continue to change as well to keep track of the latest trends.

Weekly Spread and Premium Indices for Deposit Products–September 26

by tom 26. September 2011 10:12

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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Credit Card Use on the Rise with Dodd-Frank Looming

by tom 23. September 2011 17:28

The Dodd-Frank Wall Street Reform and Consumer Protection Act goes into effect October 1, and with it a new cap on fees retailers pay for accepting debit cards. According to reports, swipe fees currently average 44 cents per transaction, and the new Fed cap is set at 21 cents. This is a compromise from the originally proposed 12-cent cap, which would have pleased retailers no end, but even a 22-cent cap is putting a squeeze on financial institutions. The result will be new fees imposed for debit cards.Credit-Card-Debt-Problem

As a result, consumers will start looking to use other types of plastic at their local store. According to a report from SmartCredit.com (reported by CNN Money), debit card swipe fees will drive many consumers back to using their credit cards.

Credit card use is already on the rise. According to the report in CNN Money:

“Americans added $18.4 billion to their debt load in the second quarter, a 66 percent increase from the debt they accumulated in the same quarter last year and 368 percent more than they tacked on in 2009, according to credit card research firm CardHub.com. The last time consumers charged up this much debt during this time period was in 2008, when credit card balances climbed by $25.2 billion. Total outstanding credit card debt as of July was $792 billion, down 18 percent from the September 2008 peak of $972 billion, according to data from the Federal Reserve. CardHub estimates that consumers will run up about $54 billion more in credit card debt by the end of 2011 than they did in 2010.”

The same report indicates that although credit card debt is on the rise, the number of consumers making late payments or defaulting on cards is dropping. Some analysts are concerned that this fiscal responsibility for consumers may be short-lived, and the ease of use offered by credit cards may bring credit card debt to pre-recession levels. We will have to see of consumers have learned from their mistakes of the past.

Weekly Spread and Premium Indices for Deposit Products–September 19

by tom 19. September 2011 18:22

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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Weekly Spread and Premium Indices for Deposit Products–September 12

by tom 12. September 2011 16:26

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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APY | National Pricing Indicator | Banking Trends | Deposit Products

MRI Issues September 2011 APY Projection for Deposit Accounts

by tom 7. September 2011 17:31

Every month, Market Rates Insight issues a projection of APY for the month. Here is the projection for the month of September 2011:image

Term Accounts Projection

During this month, the national average APY for Regular term accounts is projected to decrease 2 bps to an APY of 0.74. The national average APY for Special term accounts is projected to decrease 1 bpt to an APY of 1.06 (see Figure 1).

Among Regular term accounts, the 36-month CD is projected to have the greatest decrease of 3 bps to an APY of 0.95, whereas the 12. 24. 36 & 60-month CDs are projected to decline by 2 bps each. Among the Special term accounts, the 3-month CD is projected to decrease 3 bps to an APY of 0.21, and the 48-month CD is projected to increase 4 bps to an APY of 1.61 (see the report).

Liquid Accounts Projection

imageThe national average APY for Regular liquid accounts is projected to decrease 1 bpt to an APY of 0.15. The national average APY for Special liquid accounts is projected to remain unchanged at an APY of 0.32 (Figure 2).

Regular checking accounts APY is projected to remain unchanged at current APY of 0.12, whereas savings and MM APY is projected to decrease by 1 bpt each (see the report). Among the Special liquid accounts, checking is no offered, and savings is projected to decrease 1 bpt to an APY of 0.64. MM account is projected
to increase 2 bps to an APY of 0.33.

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APY | CD Balances | Deposit Products | Market Rates Insight

Weekly APY Spread and Premium Index for August 29

by tom 29. August 2011 16:42

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives at banks and credit unions  with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:
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Number of Problem Banks Shrinking–First Time Since 2006

by tom 26. August 2011 17:51

There’s good news in banking this week. According to a report in the Wall Street Journal, for the first time since 2006 increased lending for the first time in Q2 of 2011. According to the FDIC, the increase was a modest 1 percent from the previous quarter, but it was an increase nonetheless. At the same time, bank profits were down for the second quarter in a row for Q2 ending in June. The FDIC indicates that the lack of profits is due to a lack of loan-worthy customers. (It’s  interesting that bank revenues have only fallen in three quarters in the last 30 years.)

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According to the report, there were 22 bank failures during the quarter, which is the lowest number since the beginning of 2009. Banks are struggling to find ways to increase revenue from fees and interest payments in order to return to profitability:

"We haven't seen banks' ability to earn money, prior to credit improvements, do much in the last year or so, and the recent changes in interest rates make it even more doubtful that they'll be able to be very successful," said Fred Cannon, director of research at investment bank Keefe, Bruyette & Woods.

The article also reports that banks have higher cash reserves, partly as a hedge against losses but also because they can’t find credit-worthy borrowers for loans. Large banks increased their balances with the Fed by $137.3 billion in the second quarter, an increase of 22 percent over the first quarter.

Weekly Term Accounts APY Spread and Premium Index for August 22

by Tom 23. August 2011 17:52

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index

The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

Premium Index

Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:


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