Beware of the marketers!

Florence Savings Bank ‘Rewards’

Actually Require Very Big Outlay

By Edward Shanahan

 The Florence Savings Bank ad in the Gazette the other day caught  my eye for a couple of reasons – the lithe and self-satisfied woman with a text bubble telling us how much interest she earned on her Rewards Checking account seemed pretty hip.

 I mean she earned $287.26 in interest last month on her account. How hip is that? And to look so attractive and seem so perky at the same time.

Dopey me. When I examined my FSB statement the other day I had bagged all of $.13 in interest on my checking account. That would be 13 cents compared to almost $300 for the young woman in the ad.

 That’s not fair, I said to myself, even though I am not nearly as comely as the women in the ad. And I opened this particular joint account some 18 years ago, and have been doing business with the Florence bank since 1971 when we first came to town. So we are pretty old fashioned in that sense.

  I called the bank’s customer service department, or call center as it is known, and

talked to one Angela Ieng, who was pleasant and, best of all, informative.

 She explained that there are special features associated with the Rewards Checking account, which provides the higher interest rate. Right now the interest rate is 4.07 percent, but started out at 6 percent when the new service was initiated.

 She rattled off the various requirements – you must make at least two electronic deposits a month in the account, use your debit card for at least 12 purchases a month, even if they are only for a cup of coffee or postage stamps, and receive your bank statements on line.

 My old-time, white bread account, and now obviously unloved by the bank, pays an interest rate of  .05 percent or one-half percent, even though, according to Angela, it is called an interest checking account.

 Thanks Mr. Heaps and you boasting in your expensive newspaper ads about the explosive growth of the bank. “A few months ago, our bank quietly crossed a major milestone,” he wrote in the ad,  “one billion dollars in total assets” compared to the $826.75 at the end of the first day of business in 1873. With a billion dollars in assets and for the use of my money, you pay me 13 cents a month. I’m humiliated.

 Still, as I talked to Angela, I wanted a little more information. Specifically, how much money would the bright-looking professional woman in the ad need to have on deposit at the end of the month to earn $287.26 in interest?

 As I am not very good at math, she did some calculations and came up  with a figure of about $97,000. I was surprised the customer in the ad had that large a checking account. Most people are up to their eyeballs in credit card debt these days, unable to keep up with principal payments, not to mention mounting interest obligations. This savvy  woman had managed to wind up the month with $97,000 in her checking account.

  Good for her, if she did, but it did not seem plausible to me. I shared that thought with Angela, who said she’d pass it along to the bank’s marketing department.

 I ended my last monthly account cycle with a balance of $1,746, and earned 13 cents. If I had a Rewards account, I would have earned $5.93 in interest, according to Angela’s figures.

 Still the $97,000 figure bothered me so I later did my own calculations of 4 percent annual interest, divided by 12 months and got a balance closer to $86.000 for the woman, who obviously is fictitious, in the ad, still a hefty amount to carry in a checking account.

 Despite the warm and cozy, community-first image that the Florence Savings Bank projects in all its advertising, I’m thinking the Rewards Account ad is deliberately misleading the typical customer.  The average checking account customer is not going to do the math to figure out how huge an account balance you would need to earn anything remotely close to $287.26 in monthly interest.

 Furthermore, as I talked more to Angela, I found that on most scores  I met the requirements of the Rewards Account (without getting the reward). We have funds deposited electronically each month into our account, I get a statement on line, and we use our debit card selectively at the local supermarkets. But I find it easier to keep track of spending when I mainly rely on cash, rather than plastic/electronic banking for small, discretionary purchases.

  I just can’t commit to using my debit card at least 12 times a month, and thus I’ll have to make do the old fashioned way which might, in the long run, have its own rewards.