FIXED DEPOSITS

Wanganui Chronicle, Volume LXXXIII, Issue 19720, 10 December 1926, Page 7

FIXED DEPOSITS

RATE OF INTEREST INCREASED BROKEN PERIODS PROVIDED FOR. (Per Press Association.)'* WELLINGTON, Dec. 9. Banks, in order to encourage the placing of money on fixed deposit with them for short terms, have decided to raise the three months’ rate to .3| per cent, per aainum, and allow the same rate for broken periods after three months for any time up to within twelve months. The new rate is to take effect as from December 15. The revision is calculated to make banks’ rates more attractive to the public, and while the increase is only 1 per cent., deposits will be accepted for any length of time after three months. For instance', und\ the new system, a man will be able to take out deposits for three months and f\ir days and will receive interest for that period. Previously the arrangement has been that payment would only be rAa.de for the complete month. Now the banks are prepared to take' deposits for odd periods, and it is thought that there must bo a good deal of money available for this kind of investment once the people' become acquainted with the rates.

The alteration should prove of benefit to small investors who have small sums of money that they may require at short notice. A man, to quote a specific instance, may have a mortgage falling due in five months, and the banks are prepared to take money on deposit for that period and pay inte'rest on it at the rate of 3J per cent. The new system will prove of advantage to the finances of the country in that the more money that the banks hold on deposit and current accounts the greater the reserve for lending purposes and financing the business of the country.