Coolidge Bank Officials Reduce NOW Account Interest Rates

Coolidge Bank and Trust Company has announced to its customers that interest rates in NOW checking accounts will fluctuate depending on the amount of money in the account starting with the April/May statement.

According to the notice which announced the change to customers, bank officials attribute the new policy to increased costs in "areas over which we have little or no control: utilities, postage, telephone, taxes, printing costs, insurance, etc."

Edwin B. Burr, regional director of the Federal Deposit Insurance Corporation, said yesterday that, although he would not call it a trend, a number of banks have switched from the original 5-per-cent interest.

"Banks are now more conscious of the costs of NOW accounts' interest," he added.

Jan DiLegge, a marketing adviser for Coolidge Bank, said yesterday, "We have absorbed the costs for as long as we could. We just have to bend with the times."

"Over the last few years our earnings are 'not what they should be, and because of that we have to make some adjustments," Charles S. Butters; assistant vice president of the bank, said yesterday.

Not Looking Good

He added, "The top management has decided that 'it has to do something to improve the profit picture."

Bank officials decided that it cost more to maintain accounts with smaller balances than the bank was earning from using the money. "It is like selling dollar bills at 98 cents. No matter how much you sell you still cannot make any profit," Albert J. Baillargeon, executive vice president of the bank, said yesterday. "We want to be a competitive bank, but do have a responsibility to our stockholders,"he added.

Baillargeon said that the new policy will affect 10,000 of the bank's 65,000 NOW accounts. He estimated that there are over 5000 NOW accounts in the Harvard Square branch held by people associated with Harvard, over half of whom are students.

The new policy sets a $300 minimum balance in order to earn the minimum interest rate of 3 per cent. Accounts over $399.99 will receive 4 per cent, while those over $499.99 qualify for a full 5-per-cent interest.

For accounts with a balance under the $300 minimum, there will be a service charge of $1 per month.

Previously the bank paid 5 per cent interest on any amount in a NOW account.

Several students contacted last night said they were disappointed with the bank's decision. "That is really awful," Pia Y. Massie '81 said yesterday. "That is the one thing I liked about Coolidge," she added.

Brian L. Dunmore '80 echoed other students contacted, saying yesterday, "I cannot tell now whether I will withdraw my money from Coolidge, but I will certainly investigate what is offered at other banks.