Promotional rates for bank deposits

Many banks offer an attractive rate to draw new funds, but renew the deposits at their normal board rates (which are lower than the promotional rate).

Is this a fair deal?

If the bank is transparent about the arrangement, then it is all right. But if they do it quietly, then it is unfair to the depositor.

There are three ways for the bank to handle the renewal:

1. renew it automatically (without telling the depositor)
2. send a letter to inform the depositor
3. telephone the depositor

The fairest way is to telephone the deposit (method #3) and tell them the fact - i.e that the deposit is being renewed at the board rate. The bank is reluctant to do it, as the depositor will renew the deposit at a higher promotional rate that is available in the market

Some banks send a letter (method #2) to the depositor. Many depositors do not open their mail on time, and miss the deadline. The deposit is automatically renewed at the lower board rate.

Here is my suggestion to the depositor. If you put your deposit at a promotional rate, put an entry into your diary or organiser. It will remind you to call the bank before the expiry date to check what is on offer. You can also search for the best offer available from other banks.

Just get organised.

Quote from Tan Kin Lian: If you do not take care of your financial matters, your bank will take care of it for you, but in their favour.