Above a Paul Krugman Bitcoin commentary on NYTimes.com today, Duke Energy is pitching Premier Notes, a liquid savings account alternative that pays 1.5% for "deposits" of $50,000 or more, 1.3% for $10,000, or 1.1% for less than $10,000 (see screenshot below). Minimum opening amount is $1,000. There is no online application, but you can print a PDF and mail it back with your check.
The timing of the advertisement is no coincidence. March and April are the months when deposit balances swell temporarily with tax refunds.
The Duke Energy rate is pegged at 0.25% higher than the taxable money market average, though that benchmark is essentially zero right now (2 basis points last week). So, it’s hard to know whether this is a promotional rate that could decline to 27 bps in the near future, of if Duke Energy will keep it above the highest bank rates. That will likely depend on how much money they attract.
The notes were introduced in early 2011, and have carried similar rates since for at least the past year. A May 2012 post at DepositAccounts.com lists the top rate at 1.6% and lowest tier at 1.25%. Apparently, GE and Ford offer similar programs. Those two are both paying 1.0% (for $10k) and 1.1% (for $50k+).
Bottom line: Banks have been competing for deposits with non-insured money market vehicles for decades. So, this isn’t a new threat, nor one that you are going to lose sleep over. But it could become a material issue if more non-financial companies target the retail saver.
Duke Energy banner ad in today’s NT Times website (link, 15 April 2013)
Note: Capital One 360 maintains its NYTimes.com presence in the small upper-right-corner logo
Duke Energy Premier Notes landing page (link)
1. For more info, see our Online Banking Report (Nov. 2008, subscription) detailing various ways to leverage your online/mobile channel to boost deposits.