The FatWallet effect has hit Presidential Bank's Internet Plus checking account, which pays 2.75% APY on balances up to $25,000, as long as payroll direct deposit of $200 or more per month is maintained.

Until recently, that yield could be achieved on balances ***larger than*** $25,000 by splitting the total balance into multiple accounts, as long as $200 were direct deposited into ***each account***. With most employers allowing employees to split payroll into three or even five accounts, it was not a problem to earn high interest on total balances up to $125,000.

No longer. Now Presidential requires each direct deposit to come from ***different employers***. Since most employees have only one employer at any given time, new customers will not able to achieve 2.75% APY on any balances above $25,000, full stop.

Clearly too many large depositors were taking advantage of Presidential's generosity, yet in return Presidential was not realizing additional business beyond the deposit accounts.

Nonetheless, existing customers with multiple accounts -- even if fed by multiple direct deposits from the ***same employer*** -- will be allowed to maintain their high yield accounts and continue to receive 2.75% APY on each.

No -- must be payroll direct deposit from an employer. In fact, if you have an existing Presidential account and attempt to open a new one, you will receive a call from Presidential inquiring about the exact name of the employer which will process your direct deposit. If the employer name is the same, you will be notified that interest will not be earned on new accounts fed by the same employer's direct deposit.

What if you open an account for your spouse and deposit portion of your pay check in to it?

If you deposit less than 10K, just leave it at ING and don't worry about direct deposit or minimal balance requirements. Yearly interest on 10K at Presidential: ~ $255, at ING: ~ $204. Your frustration may be not worth fifty bucks.

If you deposit more than 10K and don't mind the 10K minimum (to earn interest, no fees either way), you are better off with Superior Savings, where you do not need multiple accounts to get the same rate on deposits over 25K (up to 100K AFAIK). For example, if you deposit 50K in Superior Savings, assuming their rate will not change for a year, you'll make ~ $1392. You will need to maintain TWO accounts at Presidential, with $1500 minimum on each to avoid fees, and you'll still make only ~ $1275, or $117 less.

Thanks for the heads up, Melech. You also analyzed the differences between Presidential vs. Superior Savings very accurately. I have accounts at both banks, and you are absolutely correct.

Although it is still up in the air as to whether Superior's rate will stay steady or plummet in Jan 2005. we'll have to wait and see.

EugeneV said:They don't seem to enforce the direct deposit rule AT ALL, unless your account is reviewed by a CSR.

I'm thinking that unless you have the mention *5* accounts at 25k each, that you can still fly under the radar. I didn't even know you could open that many accounts!? Of course, the only reason I am near 25k is b/c of 0% BT deals.

It's also interesting that Prez is "nice" enough to allow existing customers to keep with the high rate in multiple accounts.

In absolute terms, the numbers of people and dollars exploiting 0% BT offers for investment is tiny in the big picture. It has to be, or the credit cards would realize they were losing money too often with the 0% offer to keep making them.

My bet is that somebody with too much money and time on their hands tried to open 10+ $25K Presidential accounts, got noticed, and hence the crackdown. The hassle, cost and paperwork of keeping track of all those accounts, direct deposits, etc, on the bank's end is probably motivation, although I suppose they aren't eager to give out an extra $300 in promotional interest either (extra 1.25% on $25K).

Everything above $25K in balances is supposed to earn 1.5% instead of the 2.75% rate. 2.75% - 1.5% = (you guessed it) 1.25%

EugeneV said:They don't seem to enforce the direct deposit rule AT ALL, unless your account is reviewed by a CSR.

I hope I dont have a problem. I just applied online. They actually pulled a credit report on me as well. I run a small company. We cant do direct deposit because we only have a few employees and quickbooks charges nicely for it.

Rob

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