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Desperate banks? $500 reward for $15,000 for 6 months

By justme following x   2016 Mar 3, 6:01pm 10,514 views   33 comments   watch   sfw   quote     share    


An ongoing thread on the topic of banks garnering deposits to use for risky activities

Chase bank sent me some junk mail that offers $500 to open checking+saving accounts.

Requirements checking: Direct deposit each month of at least $500
Requirements saving: maintain $15,000 deposit for at least 90 days
Both: keep open for at least 6 months.
Maybe some more fine print, but I think the above is the essence.

What is going on here? JP Morgan Chase must be desperate for deposits to offer the equivalent of 6.67% interest over 6 months on the savings account (actually more because you can reduce the balance after 90 days. Do your own calculations).

Now, why is Chase doing this?

Possibility 1: With NIRP-on-excess-reserves on the horizon, the banks must be desperate to get more deposits to make more loans, so that the reserves are not "excessive" anymore?

Possibility 2: Banks need cash to paper over their bad oil/gas/fracking loans.

Which one is it, or does anyone have other suggestions?

#VolckerRuleDelayed #GlassSteagall #DoddFrank #BankSpeculation #ProprietaryTrading

#Recurring

1   someone else   ignore (0)   2016 Mar 3, 7:51pm   ↑ like (4)   ↓ dislike (0)   quote   flag        

they prolly figure that once they get your direct deposits, you will just let it ride.

and it takes away direct deposits from their competition (wells fargo around here).

2   justme   ignore (0)   2016 Mar 4, 8:50am   ↑ like (1)   ↓ dislike (0)   quote   flag        

I don't see how collecting more direct deposit paychecks can be worth $500 (or more, see below) to a bank, unless banks are in very dire need of deposits. It is almost as if the
banks are desperate for liquidity, but just as in 2007, they are loathe to be the first bank that goes to the Feds discount window.

And there are lots of these offers being made right now, see for example http://www.hustlermoneyblog.com/chase-coupons/. I also saw a very recent article about bank promotions reaching a new peak, but I misplaced the link.

3   justme   ignore (0)   2016 Mar 4, 9:11am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Could it be that the $500 represents a "shadow interest rate"? One that banks cannot advertise because it is so much higher than the Fed Funds rate that it would make banks look extremely desperate to offer it? (not to mention the giant sucking sound of all the deposits disappearing out of the competitors banks.).

Getting $500 for $15,000 deposited for 6 months represents a 6.67% yield. It is just crazy. There must be some real reason for it.

4   Done   ignore (1)   2016 Mar 4, 9:19am   ↑ like (1)   ↓ dislike (0)   quote   flag        

justme says

Could it be that the $500 represents a "shadow interest rate"? One that banks cannot advertise because it is so much higher than the Fed Funds rate that it would make banks look extremely desperate to offer it? (not to mention the giant sucking sound of all the deposits disappearing out of the competitors banks.).

Getting $500 for $15,000 deposited for 6 months represents a 6.67% yield. It is just crazy. There must be some real reason for it.

Just one more step into capitol controls.... It will be interesting if/when they reach there goal of killing paper money... No bank runs and the spiff of
shaving 3-4 points (major neg. interest rates)off your paycheck on the nano sec it's deposited.... I love to use cash it takes 1/2 the time it does for a card.... People are
naive to whats written on the wall..... Use it or lose it.....

5   B.A.C.A.H.   ignore (0)   2016 Mar 4, 9:41am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Justme, makes me recall Wachovia offering way-above market rate CD's a few months before it crashed and burned. I scooped 'em up and told the teller whom I had known from years of doing business there, "you better start looking for another job". Poor girl, I know she thought I was nuts at the time, she told me that Wachovia was doing so well it could pay above market rates to attract new customers. She was a good foot soldier and I think she actually believed that. On the other hand I took the manager aside and told him, "we both know what's happening here. What's going to happen to my safe deposit box when the bank fails and this branch closes?" He discreetly told me that the bank was not going to fail, but if it did, most probably it'd merge with another bank and either keep the branch open or move all their safe deposit boxes into a nearby branch of the new parent company. It happened like he said, a few months later. He relocated back to his hometown (L.A.) to oversee merger operations with Wells Fargo down there, and the girl landed on her feet with a teller job at a local Wells Fargo branch. I see her from time to time and I think she may not think of me
as an idiot any more.
Yep, it's obvious Justme, these offers are a sign of the times.

6   justme   ignore (0)   2016 Apr 26, 1:30pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Goldman Sachs is offering 1% interest rate in online savings accounts.

QUOTE: In a sign that it is serious about attracting depositors, Goldman is offering a 1.05% annual interest rate on deposits, which is far higher than rates currently available at other big U.S. banks.

http://www.marketwatch.com/story/goldman-sachs-is-doing-something-that-would-have-been-unthinkable-before-2008-2016-04-25

Yesterday I also received another one of those Chase $500 offers that was detailed in the original thread post. Why are banks getting so desperate for deposits?

7   DASKAA   ignore (3)   2016 Apr 26, 2:09pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

justme says

Why are banks getting so desperate for deposits?

From the article you linked: "The banker to the biggest companies around the world is offering online savings accounts to ordinary Americans with as little as $1 to deposit, as it moves to diversify its funding base and satisfy regulators. "

8   tatupu70   ignore (0)   2016 Apr 26, 2:15pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I actually did this. I got the $300 already for the checking account. The $200 for the savings acct. comes in another couple months.

9   anonymous   ignore (null)   2016 Apr 26, 2:17pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

My CU is paying me 2% to transfer them balances.

So every month, i have one card to autopay all the bills. I get their promotional offer, and then take the bill to the CU and they cut them a check and instantly put 2% of the amount into my savings. It's nice because it's like the credit cards pay me ~5% to pay my bills for me and allow ~ two months extra to pay the original bill.

10   anonymous   ignore (null)   2016 Apr 26, 2:18pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

http://www.usatoday.com/story/money/2016/04/19/goldman-sachs-q1-income-down-60-banking-trading-revenues-fall/83221342/

Goldman Sachs Q1 net income down 60% as banking, trading revenues fall Goldman Sachs's first-quarter net income fell 60% from a year ago as demand for its main business lines, investment banking and trading, tumbled. Check out this story on USATODAY.com: http://usat.

11   justme   ignore (0)   2016 Apr 26, 3:22pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

Straw Man says

diversify its funding base and satisfy regulators. "

Satisfy regulators? How does having more retail customers/deposits serve to satisfy regulators? What regulation is that?

QUOTE: The Federal Deposit Insurance Corp. is scheduled to review new rules on the amount of liquidity lenders are obliged to have on hand at a meeting Tuesday. The net stable funding ratio will require all banks to reduce their reliance on short-term funding that can be volatile, in favor of more stable long-term funding that is more expensive. The new rules are part of a broader effort to prevent a repeat of the 2008 crisis.

Given that savings deposits are very liquid from the customer POV, they do not constitute stable long-term funding for the bank. So the above quoted paragraph does not really rhyme. Serious question: Exactly what regulatory criterion is helped by having more deposits? I think there is something else going on, but I am not quite certain what it is.

Speculation: The Fed has telegraphed to banks that the Fed will soon demand that banks take back their excess reserves that they have on deposit with the Fed. This will be a reverse QE, or QT (quantitative tightening). Banks may thereby be forced to buy back the bad bonds they converted to reserves via QE. Banks do not want to do that, so they want to attract deposits (and maybe even make loans ;)) that will justify having an unchanged level of reserves at the Fed. This is tricky stuff. The threat and action by central banks of instituting NIRP *on reserves only* is likely a scheme by the central banks to sell the bad bonds that back the reserves. Think of it this way, the Fed cannot raise interest rates without reversing some of QE first, or else Fed will have capital losses on the bad bonds that they hold, when interest rates go up.

12   justme   ignore (0)   2016 Apr 26, 3:24pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

errc says

My CU is paying me 2% to transfer them balances.

What balances? Deposits? Or credit card balances? Please explain. Would like a link to that CU (=Credit Union) website if you do not mind.

14   anonymous   ignore (null)   2016 Apr 26, 4:07pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

If you sign up lmk I can recieve a referral bonus

15   justme   ignore (0)   2016 Apr 27, 12:55am   ↑ like (0)   ↓ dislike (0)   quote   flag        

For your designated billpay credit card, I assume you do have to have a real balance that has been rolled over one month before the CU will let you "transfer" it.

Or will the CU let you transfer the balance during the ~25 day grace period after the statement comes out? That is an important distinction, since interest might be incurred otherwise. Interest would eat into your 2% (+3% cash back ?? is that how you came up with 5%? 3% cash back is pretty unusual).

16   anonymous   ignore (null)   2016 Apr 27, 6:35am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Its not complicated. It's a balance transfer that pays 2% instead of charging 3%.

I use one card whose rewards program works well for me. Every month when that card comes due, i take the statement into the CU and they do a 'balance transfer ' where they cut the first CC a check to pay the monthly balance in full, so I pocket their rewards and avoid interest in the grace period. Then i pay the CU Visa card off at the end of the grace period. 2-3% rewards from CC #1. Paid off every month with a balance transfer that nets 2% cash back
Voila. ~7 weeks extension to pay the original bills + ~5% kickback from doing the leg work of the rewards from CC1 and balance transfer to CU CC2

17   justme   ignore (0)   2016 Apr 27, 10:16am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I agree, it was not that complicated.

18   DASKAA   ignore (3)   2016 Apr 27, 10:20am   ↑ like (0)   ↓ dislike (0)   quote   flag        

justme says

Straw Man says

diversify its funding base and satisfy regulators. "

Satisfy regulators? How does having more retail customers/deposits serve to satisfy regulators? What regulation is that?

Ask the author of the article.

19   EBGuy   ignore (0)   2016 Apr 27, 1:03pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

This was in the Belco CU fine print:
Cash back is considered taxable income...

As a side note, looks like Chase is trying to do its best Wells Fargo impersonation.

20   justme   ignore (0)   2016 May 2, 10:59am   ↑ like (0)   ↓ dislike (0)   quote   flag        

"Goldman Sachs is looking for a new pool of cash to plunder, and this time the firm is setting its sights slightly "lower" than normal. As revenues continue to plummet, Goldman is now looking to generate a new revenue stream with clients that are "mass affluent", or have less than the estimated $50 million average account size their current clients have."

http://www.zerohedge.com/news/2016-05-02/well-want-people-who-previously-didnt-know-where-we-were-goldman-makes-push-smaller-

That would explain the aforementioned offer of GS to pay about 1% interest on online savings accounts: They are recruiting another class of muppets to fleece. GS latest scam was to tell their clients to short gold, and sure enough, the price kept rising.

21   justme   ignore (0)   2016 May 14, 10:52pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

More desperate banks. This time Deutsche Bank is offering 5% APY but only for a 3-month period, and apparently only to customers in Belgium. Again, banks suddenly offering such high interest rates smacks of a liquidity crisis.

http://www.zerohedge.com/news/2016-05-14/liquidity-problems-deutsche-bank-offers-5-yields-if-depositors-lock-their-money-thre

22   Sharingmyintelligencewiththedumbasses   ignore (0)   2016 May 14, 11:00pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

I have received $200 and $300 several times from chase for opening various accounts, or adding direct deposits. Over the past five years, probably $1000 in bonus money from them.

Also, one of the chase cards offers or at least did offer a $0 Fee, 0% rate transfer of balance card. i have that one, and another that charged 2% for 18 months of zero interest balance transfer, plus a discover that charged 3% for 21 months. I loaned my business partner enough to buy a home cash at 8% using those 3 cards plus some cash I had laying around

good credit is valuable if you play their games.

23   justme   ignore (0)   2016 Sep 13, 7:44am   ↑ like (0)   ↓ dislike (0)   quote   flag        

There are more developments on the topic of this thread. An investigation by the Reuters news agency has revealed that Goldman Sachs has been using recently-acquired retail deposits to fund their proprietary trading operation on Wall St.

http://www.reuters.com/article/us-goldman-sachs-deposits-idUSKCN11J0CJ

http://www.zerohedge.com/news/2016-09-13/step-aside-london-whale-goldman-now-using-retail-deposits-fund-investments

This is what happens when Glass-Steagall is not the law of the land, and the implementation of the Volcker rule (from Dodd-Frank bill) against proprietary trading has been delayed yet again, as was in the news last month.

24   FortWayne   ignore (2)   2016 Sep 13, 8:18am   ↑ like (0)   ↓ dislike (0)   quote   flag        

It sure is tempting, their savings rate stinks long term though.

25   APOCALYPSEFUCKisShostikovitch   ignore (34)   2016 Sep 13, 8:20am   ↑ like (0)   ↓ dislike (1)   quote   flag        

Hey, ASSHOLES! come by the credit union parking lot when I am depositing my checks and maybe you can SUCK! MY! DICK!

26   APOCALYPSEFUCKisShostikovitch   ignore (34)   2016 Sep 13, 8:21am   ↑ like (0)   ↓ dislike (0)   quote   flag        

justme says

This is what happens when Glass-Steagall is not the law of the land, and the implementation of the Volcker rule (from Dodd-Frank bill) against proprietary trading has been delayed yet again, as was in the news last month.

Sooth!

27   18f3   ignore (0)   2016 Oct 7, 2:17pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I received the same bait from Chase. They said I had to go to a local bank to open the accounts. I did that. After I opened the accounts, I had to transfer the money from my other banks. Chase first made a trial deposit to verify those accounts belonged to me. Chase said I could not transfer more than $10000 from each bank, so I transferred $10000 from one bank, and $5000 from another bank. Then Chase froze my login saying my large transfers were suspicious and I had to go to the local branch to clear it up. It's more trouble than its worth, so I went to the local branch and closed both accounts. They gave me a run around for nothing.

28   justme   ignore (0)   2016 Oct 7, 2:47pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

18f3 says

Then Chase froze my login saying my large transfers were suspicious and I had to go to the local branch to clear it up.

Chase is busy trying to pretend they are catching money launderers. Of course, the real money launderers get the royal treatment. Speaking of money laundering, about 2 weeks ago I got another fat bank offer, this time from HSBC:

"Get $375 for switching to HSBC"

HSBC is famous for laundering the money of drug cartels and terrorists.

https://www.theguardian.com/business/2016/jul/11/hsbc-us-money-laundering-george-osborne-report

29   bob2356   ignore (2)   2016 Oct 7, 6:00pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

justme says

HSBC is famous for laundering the money of drug cartels and terrorists.

Pretty cool how HSBC manages to avoid US sanctions by working with customers in Iran, Libya, Sudan, Burma and Cuba while a major bank in Andorra gets shut down for the same thing. It's good to have friends in high places.

30   justme   ignore (0)   2016 Oct 7, 6:22pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

The United States is the kingdom of Double Standards.

31   justme   ignore (0)   2017 May 9, 12:11pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Bloomberg News has an article that describes a JP Morgan sales pitch concerning an upcoming "deposit drain". JPM is hawking the need for smaller banks to merge with bigger banks (like JP Morgan, undoubtedly) because of an upcoming lack of deposits. The context of the scenario is the reversal of QE that the Federal Reserve bank has been talking about as starting sometime later in 2017.

https://www.bloomberg.com/news/articles/2017-05-08/jpmorgan-tells-banks-to-partner-up-as-u-s-deposit-drain-looms

The story that JPM tells is not accurate. Here is what is claimed:

>>A “deposit is destroyed” if the “Fed does not reinvest,” the presentation states.

Wrong. What is removed (*) is RESERVES, not deposits. Both Bloomberg and JP Morgan are mis-characterizing what is going on when FRB stops reinvesting maturing QE bond assets.

The problem with dwindling reserves is something different.. Sources indicate there are maybe about 2T more reserves overall at the moment than what is required to maintain the overall required fractional reserve ratio relative to the current overall amount of debt. BUT I think many banks seen individually do NOT have excess reserves, because the reserves gained by QE (QE=parking crappy bonds at the FRB and getting these bonds credited as reserves) have already been assigned to other banks as payment for interbank debt, much of it due to loan losses after 2007.

So: These weaker banks need more deposits so that they can buy some sort of acceptable debt (Treasury Bonds) that FRB will accept as reserves. I’ll say it again: Reverse QE does not “destroy deposits”, but it creates a need for more deposits with which to buy reserve-worthy assets. Especially for weaker banks, that is banks that do NOT have excess reserves.

All of this appears to be why even big banks, including Citi, JPM, HSBC and Goldman Sachs all are sending out adverts offering $3-500 for opening 15k bank accounts with them, They want to compete with the smaller banks for deposits, and they plan to maintain and use their excess reserves as a weapon to take over smaller banks.

(*)”destroyed” is for those who are prone to hyperbole

32   APOCALYPSEFUCKisShostikovitch   ignore (34)   2017 May 9, 12:27pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

If you deposit money in a commercial bank in the US, it is being leveraged for criminal enterprise.

The top 20 largest banks in the US need to be dechartered.

Reprobate horrors like Wells and BofA need to have their first two layers of execs chained to trees in Alberta and left to be eaten by bears.

33   anonymous   ignore (null)   2017 May 9, 12:43pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Party like it's 1999!

I just used a new CC to get 10k for zero fees, zero interest for 15 months.

It's free money, they're giving it away





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