Saturday, August 14, 2010

Why banks aren't paying higher interest rates

So far in 2010, Canadians have opened 20 per cent more chequing and savings accounts than last year at this time.

That amounts to about $100 billion in new deposits and Canada’s major banks have been fighting for a share of it with incentives, including cash rewards for customers opening new accounts.

While consumers can get cash and travel points to open a new account, there is one conspicuous weapon missing in the banks’ marketing arsenal when it comes to attracting new customers.

And that is the lure of higher interest rates, something you won’t find the banks offering on those new savings accounts and products – or old ones for that matter.

On July 20 when the Bank of Canada raised its overnight rate by 0.25 per cent to 0.75 per cent, the increase was immediately passed on to consumers with lines of credit, mortgages and other products that were priced directly off of the prime rate. (more)

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