Banking: New Leaf for Passbooks

New Leaf for Passbooks

This week the process of interest-rate deregulation that began six years ago completes its final chapter. The limit on the interest that financial institutions can pay for passbook savings accounts, which has been fixed at 5.5%, vanishes as of April 1. The change affects some 91 million accounts, which hold more than $300 billion.

Nonetheless, banks and savings and loan associations will probably not pay their passbook holders much more than the current rate. Many of these customers kept their money in low-paying passbook accounts even when money- market funds or bank certificates of deposit were offering interest of 15% or...

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