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Fed Leaves Interest Rates Unchanged

Category: News and Notes- fhuff- 4:26 pm/ January 29, 2010

The Federal Reserve decided this week to keep interest rates at record lows. The target interest rate remains near zero. The decision is aimed at helping the economy recovery.

One member of the Fed, Thomas Hoenig, voted against the action. A statement by the Fed said that Hoenig ”believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.” Hoenig is president of the Federal Reserve Bank of Kansas City.

The Fed said the economy is continuing to strengthen. Household spending is improving but “remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.” However, business spending on equipment and software seems to be improving.

Also, the Senate backed Ben Bernanke in a 70-30 vote for a second term as chairman of the central bank. Bernanke’s future as the head of the Federal Reserve was shaky due to opposition from lawmakers fed up with big banks and regulators.

“The politically neutral and independent Fed has really been politicized this week, probably to its detriment,” Chris Krueger of Concept Capital, a private firm that tracks Washington for institutional investors, told the New York Times.

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Large, national banks are not the only places to find competitive savings rates. Many savers are turning to local banks to find some of the best savings accounts.

Geddes Federal Savings and Loan Association, which serves the Central New York area, has a 2% annual percentage yield (APY) on money market account balances of $50,000 and up. Balances between $1,000 and $49,999 earn a money market rate of 1% APY. Money market accounts must have a minimum of $25 to earn interest.

Geddes Federal Savings and Loan Association also offers certificates of deposit (CDs) with competitive rates. CD rates include:

  • 1.3% APY for 4 months
  • 1.55% APY for  9 months
  • 1.65% for 12 months
  • 1.7% APY for 18 months
  • 2.15% APY for 24 months
  • 2.45% APY for 36 months
  • 2.65% for 48 months
  • 3% APY for 60 months

The bank also offers other CD rate terms. To earn the best CD rates, a CD must have a $500 minimum balance. Withdrawing money early results in a penalty.

The bank also offers CD rates for IRAs. Those CD rates include 2.15% APY for 12 months, 2.65% APY for 24 months, and 3.5% APY for 60 months. The bank offers other CD rates and terms for IRAs. The IRA CDs require a $500 minimum deposit.

Geddes Federal Savings and Loan has one office just outside of Syracuse, N.Y. The bank has been in business since 1949. The bank does not offer mortgages and services all of its accounts in-house.

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National Bank of Kansas City has one of the best certificate of deposit (CD) rates for three year terms. A CD with a term of 36 to 47 months has an annual percentage yield (APY) of 2.45%.  Other CD rates, which are effective as of Jan. 29, include:

  • 0.5% APY for 3 to 5 months
  • 0.75% APY for 6 to 11 months
  • 1.5% APY for 12 to 23 months
  • 1.85% APY for 24 to 35 months
  • 3.03% APY for 48 to 59 months
  • 3.22% APY for 60 months

You can open a CD online. A switch kit can also be downloaded from the bank’s website that allows you to fax the application for a CD. The bank also offers CDs for IRAs. To open a business account, call or visit a bank branch. Other qualifications to get the best CD rates offered at National Bank of Kansas City include:

  • $5,000 minimum opening deposit for a personal or business CD
  • $4,000 minimum opening deposit for an IRA CD
  • Minimum daily balance of $1
  • Penalty for early withdrawal
  • CD rates are subject to change at any time

If you’re holding out for the best CD rates going forward, sign up for the bank’s rate watcher service. The bank notifies you when CD rates reach your desired level.

National Bank of Kansas City is based in Overland Park, KS and has been in business since 1999.

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The Momentum Savings Account at Ridgestone Bank has a 2.5% annual percentage yield (APY). The savings rate is for new accounts. Details of the offer include:

  • $100 minimum deposit to open savings account
  • Must also open a Momentum Checking Account
  • No minimum to open checking account
  • Must complete eight transactions in checking account during each statement cycle
  • Set up automatic transfer of at least $100 from checking account to savings each month

The savings rate of 2.5% APY is for accounts with a balance of $2,500 to $49,999. The savings rate for balances of $50,000 and up is 1% APY. Balances below $2,500 have a 0.25% APY.

When you open the savings and checking accounts, you receive a combined monthly statement through the bank’s website. You get free online access and bill pay, as well as telephone access. You also get access to free ATM terminals nationwide with an ATM/debit card.

Ridgestone Bank also offers a cash bonus with the checking account. When you set up direct deposit into your checking account you get $50. You can also receive a free box of checks for a new account when you bring your old checks to the bank to be shredded.

Ridgestone Bank operates in the Chicago area and Southeastern Wisconsin.

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TCF Financial Bank, of Wayzata, MN says it plans to end its totally free checking due to new rules that limit overdraft fees.

“It’s the end of an era,” Bill Cooper, the bank’s chairman and CEO, told the Star Tribune. “We invented totally free checking and everyone copied it. It was a wonderful product. But the regulatory apparatus, misinterpreting what everyone wants, has changed that.”

More than 1 million checking accounts that were previously free now require a monthly maintenance fee. The bank didn’t disclose the amount of the maintenance fee for the checking accounts, but it is expected to go into effect soon. Customers who meet a minimum balance requirement won’t be charged a monthly maintenance fee.

Apparently many banks are looking at doing away with free checking accounts as a way to boost revenues. Some banks have introduced or increased fees for other services. Many banks expect to lose a lot of money they normally make from overdraft charges when new federal rules go into affect.

Beginning in July, banks won’t be allowed to charge overdraft fees for transactions involving ATM and debit cards unless customers choose to opt in to that service.

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