Low-interest accounts remain in use

When interest-bearing checking accounts pay less than 1 percent, you'd think that neither the banks nor their customers would bother.

But while interest-bearing checking isn't a big sales point these days, the accounts keep chugging along.

Jeff Bargerhuff, senior vice president for marketing at Nevada State Bank, said customers appear to have been desensitized to the effects of low interest rates.

Checking-with-interest at Nevada State Bank last week paid all of a half percentage point on balances not enough to buy a box of checks each year on a $1,000 balance.

But even at that, Bargerhuff said, balances are rising good news for bankers who see checking-with-interest and savings accounts as stable sources of funds with which to make loans.

Sean French, Northern Nevada Community Bank President for Wells Fargo, said his bank, too, has seen increased balances in basic accounts.

Although interest rates are at their lowest levels in decades, French said consumers who were burned in the stock market look for safety even if they're paid a pittance.

Customers know, too, that rates eventually will head back up, French said.

Tiny as interest payments may be, they're still important to retirees and others who depend on their savings, noted Stan Wilmoth, president of Heritage Bank.

He said customers in the current environment sometimes will chase even a small difference in interest rates in an effort to boost their monthly income.

"People are as interest sensitive," he said, but added that good service almost always trumps a slight difference in interest earnings as a reason banks attract and retain customers.

And it's difficult to whip up customer interest in interest-bearing products when rates are so low.

"They just don't get real excited about it," said Dave Funk, president of Nevada Security Bank.

But even if customers lost all interest in low-paying accounts such as checking with interest, banks probably would keep the programs alive.

"In a couple of years someday interest rates will go back up," said Bargerhuff.

"You don't want to scrap an entire product."