| Savings levels and rates should rise in 2007 |
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Rick agrees, saying
some credit unions "are
taking risk-based lending to
a higher level. A lot of credit
unions are trying to help low-income
members not become entwined
in ongoing relationships with
traditional payday lenders."
Congress and the regulators
A shift in control of Congress could also spell changes to the checking and savings arena. "The Democrats are much more open to the agenda of consumer groups," says Elmendorf. "How that would work out is hard to say."
Regulators will also be taking a closer look at a couple of industry practices, courtesy overdraft protection and check-hold time periods.
In response to questions from consumers and consumer advocates, the FDIC will be studying courtesy overdraft programs in 2007, looking at how they work and the fees that are charged. "The FDIC continues to be concerned about that, in general," says Elmendorf.
Consumer groups want to see caps on fees or fees that are based on the actual amount of the overdraft, says Hillebrand.
Other consumer
groups want to see change in
the length of time banks are
allowed to hold checks before
crediting customer accounts.
In 2005, Check 21 regulations
allowed institutions to debit
accounts almost instantly, but
often money is much slower on
the deposit side.
The Federal Reserve is scheduled to release its study into the matter in 2007.
Where will rates go?
No one really knows what savings
rates are going to do in the
next year. But everyone has
an opinion.
"Going into
the beginning of next year,
we will be in the same interest
rate environment we're in now,"
says Leggett. But he does
expect that, during the next
year, longer term CDs will start
paying better rates than shorter-term
CDs.
This year, investors
who wanted good rates on CDs
were looking at short-term investments.
At the start of the year, 14-
to 16- month CDs were showing
the best rates, but toward the
end of the year, the investments
in the three- to four-month
rates gave a higher return,
says Fuschino.
As for 2007, "To
some extent, we're in uncharted
territory," he says. "It's
anticipated that the Fed has
probably stopped raising rates,
and that the next move will
be a decrease. But we don't
know if that will be in two
months or 12 months."
In 2006 many consumers
stored away money in accounts
at Internet-based banks and
other institutions which offered
rates comparable to CDs. But
in 2007, speculation is that
rates are going down, says Oleson.
If the savings rates follow
suit, he wonders if consumers
will switch banks or savings
vehicles.
Many believe rates
will remain largely unchanged
for the next year. "I don't
think interest rates will be
measurably different a year
from now," says Hart. As
for the Fed's next move, he
says, "the information
doesn't support the next move
being down."
Dana Dratch is a freelance writer based in Atlanta.
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