State, banks seeking savers
Program to dangle big interest-rate boost
By Steve Wartenberg
THE COLUMBUS DISPATCH
An extra 3.25 percentage points worth of interest on savings accounts is an inducement Ohio Treasurer Kevin Boyce hopes will spur state residents to start socking away more of their money.
“We want to encourage people to have their own rainy-day fund,” he said yesterday during the introduction of his office’s SaveNOW program.
The new program rewards Buckeye savers with the additional yield if they participate in a yearlong financial-literacy course and complete a program evaluation.
The 3.25 percent is in addition to the interest rate that participating banks currently pay, which in Ohio averages 0.15 percent, Boyce said.
The idea, he said, is to promote financial literacy during a time of financial turmoil and get more people into the habit of saving.
SaveNOW participation is open to all Ohio residents. A maximum of $5,000 can be deposited over the course of a year.
Participants will receive a series of financial newsletters via mail or e-mail. Topics will include budgeting, credit and debt, financial planning and other topics. After 11 months, savers receive an evaluation, which measures savings behavior and personal-finance knowledge.
The money for the higher yield comes from an initial $25 million in state funds that will be deposited in participating banks. The interest from the state money will pay an extra 3 percent yield to SaveNOW participants, and the bank will chip in the remaining 0.25 percent.
Four banks are part of the program, including PNC Financial Services, which purchased National City Corp. in December. The merged bank is the largest in the state with about 450 branch offices, and all are SaveNOW participants.
“We believe very much in this program,” said Kay Geiger, PNC regional president for Cincinnati and northern Kentucky operations. “The idea is to attract new savers, people who have never saved.”
The other three participating banks are Wayne Savings in Wooster, Liberty Savings in Wilmington and MainSource Savings in Troy.
Those interested can sign up to be part of SaveNOW at any of the branches of the four participating banks, where more detailed information is available.
More banks could be added to the program, said Anika Chandler, SaveNOW program manager.
The idea for the program came from previous Ohio Treasurer Richard Cordray, who is now attorney general.
The plan is similar to a longtime, linked-deposit state program that connects small businesses with bank loans at below-market interest rates.
“We conceived of SaveNOW and got it enacted (in the state legislature),” Cordray said at yesterday’s announcement at PNC’s Downtown office. “But kudos to Treasurer Boyce for all the work it took and for lining up a banking powerhouse.”
Geiger estimated that 20,000 to 25,000 savers will sign up for the program at PNC branches.
There is a limit to how many people can participate, Boyce said, adding that the state could deposit additional funds with the four participating banks to allow more residents to participate if necessary.
“This means you better hurry up and get your money in,” he said.