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Different CD Rate Offers

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Question: 
Aside from the potential customer service nightmare, is it okay to offer a better (or different) rate on a CD to existing customers (not available to new customers) in an effort to retain core money?
Answer: 

Such targeting is usually done the other way around (special rate for new money only). However, as long as you clearly state in any marketing that the rate is only for current customers (or don't market it at all and only use it defensively to prevent rate flight to other banks), you should be OK. Make very certain, though, that your disclosures for any renewed CD accounts are correct. If you use these rates defensively, ensure that your customer contact personnel know when to pull them out to keep business, and when not to.

First published on BankersOnline.com 1/31/11

First published on 01/31/2011

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