Word: cds
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...this week; it could go higher still, perhaps to 9½% in the fall. The banks in turn had to pay as much as 10.3% to get money to lend; that was the highest rate offered last week to depositors who would buy $100,000 certificates of deposit (CDs). While borrowers and lenders alike groaned, savers rejoiced in the highest yields ever offered on even modest accumulations of money...
...permitted to pay 5%, and savings and loan associations 5¼%. From there, the bank ceilings rise to 5½% on deposits made from 90 days to one year; 6% on one-to 2½-year money; and 6½% on 2½-to four-year deposits. On CDs running for four years or longer, banks can now pay anything they please; the Federal Reserve Board requires only a minimum deposit of $1,000 and a penalty on the saver who withdraws his money before maturity...
...frantic competition for small deposits, banks and S and Ls are introducing higher-yielding varieties of $1,000, four-year CDs almost daily and touting them in blaring bold-headlined newspaper ads and breathless radio commercials. Last week these CDs generally paid 7½% annual interest, but many banks raised the effective return to 7.79% by compounding interest daily. Manhattan's Union Dime Savings Bank advertised $1,000 CDs at 8¼%; daily compounding raises the effective rate to a towering...
...says, "and when I'm in trouble I ask somebody, and when I'm not I don't"-Wriston helped initiate many of First National City's innovations. It was he who, with another staffer, "invented" the negotiable certificates of deposit in 1961. The CDs, as they are known, have since helped banks to recoup a lot of badly needed corporate deposits, which had been flowing into treasury bills and other short-term notes...
...Certificates of deposit, which hit a high of $18.6 billion during the tight-money crisis last August, rose even higher last month until they reached $19.1 billion. Last week New York's First National City Bank announced that it was cutting the interest rate on small-sized CDs from 5% to 4¾%. Other banks began limiting the CDs they would accept...