Paying Preferential Interest Rates

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Question:

Can a bank pay more interest to one account holder than they do to another if they both have a NOW account? If so, what disclosures are required?

Answer:

Banks generally have varying rates for classes of accounts to stay away from any chance of treating individuals differently arbitrarily. The rates might be tied to total deposits with the bank, all accounts with the bank, different markets, etc. Disclosures are the normal disclosures, rate ads/charts will spell out criteria including all information required by the Regs.

First published on BankersOnline.com 1/28/08