Savings Accounts

Suddenly, the lowly bank passbook account isn't all that lowly anymore. As market interest rates continue their downhill slide, interest rates paid on passbooks and their more contemporary cousin, statement savings accounts, have held steady. When market rates were well into the double digits a scant two years ago, bankers were extremely pleased to pay consumers a modest 5.5 percent on their statement or passbook savings. But as that 5.5 percent rate has stood firm at many banks, interest paid on money market accounts is falling closer and closer to it. PSFS, for example, is paying 5 1/2 percent on passbook and statement savings.

As the Medicare Trust Fund heads toward a projected $400 billion deficit in 1995, Congress may approve the most significant and far-reaching expansion of Medicare since its inception in 1965. Clearly there is a need for catastrophic-illness insurance, but instead of burdening the elderly with additional taxes, the federal government should make it possible for individuals to make a choice in how to meet their health care needs. Under the current House-passed catastrophic care scheme, the vast majority of the elderly - 85 percent who are covered by private plans or HMOs - would be subject to a new tax burden.

President Bush's proposed expansion of health savings accounts depends on a premise that research shows is questionable: that Americans want more financial choices in their lives. Experts point to a lack of participant activity within 401(k) plans as a sign that many Americans already feel overwhelmed by financial options. The 401(k) experience points to both the risks of HSAs and the road ahead for health-care management. Bush proposes to offer tax breaks to individuals who set aside pretax dollars in HSAs to pay their medical expenses.

Although the United States has proved itself able to meet challenges from outside its borders, ING Direct founder Arkadi Kuhlmann said challenges from "within have been the most difficult to define and deal with. " "There seems to be an inability to find a consensus in all matters that affect our personal lives," Kuhlmann told an audience of financial leaders and consumer-advocacy groups Tuesday at the Hyatt at the Bellevue in Center City. The occasion was the annual community awards luncheon of the Philadelphia consumer organization Clarifi.

Sharp declines in interest rates, which already have hit investors in bonds, certificates of deposit and money-market funds, are now affecting basic savings and checking accounts in the Philadelphia area. PSFS and Continental are the first area banks to announce cuts in interest rates on statement and passbook savings accounts. PSFS, the big savings bank at which nearly a fifth of Philadelphia-area households have accounts, has mailed letters to customers announcing that on Oct. 1 it will lower rates from 5.5 percent to 5.25 percent on passbook and statement savings accounts.

Banks could have scored some points with the little guy starting Jan. 1 by offering the same high interest rates on small checking and savings accounts as they do on big ones. But most larger local banks have chosen to continue their old practice of favoring big accounts, making only "cosmetic" changes in checking and saving account policies. Starting Jan. 1, the government said, banks could offer any interest rate they choose on any amount of money deposited in money-market savings accounts and other interest-bearing checking accounts.

Although it's difficult to state just who uses check-cashing services, it's a little easier to determine who doesn't regularly use savings institutions. A study commissioned two years ago by the American Bankers Association surveyed 527 households with incomes below $20,000 who had no checking accounts - and only 38 percent had savings accounts. The bankers' group said the results call into question contentions that such people don't have bank accounts because they can't afford the fees.

Some former Atlantic Financial Savings customers could stand to lose money on interest-bearing accounts, now that the long-ailing thrift has been purchased. First Fidelity Bancorporation last month bought 29 of Atlantic's Philadelphia area branches from the government for $14.4 million. Earlier, Atlantic had been placed into receivership by the Resolution Trust Corp. In such a situation, the bank that is doing the buying can cut rates two weeks after the sale. First Fidelity has announced plans to decrease the amount of interest former Atlantic customers are paid on certificates of deposit as well as on checking and savings accounts.

Montgomery County is dropping it. Bucks County is going ahead with it. And Philadelphia can't decide what it will do. "It" is the personal property tax on certificates of deposit bought from out-of-state banks. The personal property tax amounts to a $4 levy on each $1,000 in value of intangible property, which includes stocks, bonds, mutual fund shares and other investments. It is assessed on Jan. 1 and, in Philadelphia, the reporting form for the tax must be filed by Feb. 15. Taxpayers then get billed for what they owe. Montgomery County officials led the way last year by imposing the personal property tax on residents who own CDs purchased from out-of-state banks.

The inflation rate is down. The tax-shelter benefits of owning real estate will almost certainly be curtailed if Congress passes a tax-reform law. Property values are not appreciating as they did in the 1970s. In a few areas, real estate prices are declining. Mortgage interest rates have risen recently. Does all this mean real estate is not the smart investment it was a few years ago? To learn the answer, an investor must consider the pros and cons of owning real estate today. All investments - whether common stocks, bonds, savings accounts, gold, coins, stamps, oil and gas, rare art or real estate - have four interrelated elements that should be considered before investing: SAFETY.

WASHINGTON - Republican presidential candidate Newt Gingrich once led his rivals for the nomination in polls. Today, he's millions in debt and describing Mitt Romney as "far and away the most likely" GOP nominee. Running for president "turned out to be much harder than I thought it would be," he said Sunday. "I do think there's a desire for a more idea-oriented Republican Party, but that doesn't translate necessarily to being able to take on the Romney machine," Gingrich said in an interview on Fox News Sunday . After his Jan. 21 victory in the South Carolina primary, the former House speaker said the Florida primary he lost in the following days turned into a "real brawl.

Although the United States has proved itself able to meet challenges from outside its borders, ING Direct founder Arkadi Kuhlmann said challenges from "within have been the most difficult to define and deal with. " "There seems to be an inability to find a consensus in all matters that affect our personal lives," Kuhlmann told an audience of financial leaders and consumer-advocacy groups Tuesday at the Hyatt at the Bellevue in Center City. The occasion was the annual community awards' luncheon of the Philadelphia consumer organization Clarifi.

Although the United States has proved itself able to meet challenges from outside its borders, ING Direct founder Arkadi Kuhlmann said challenges from "within have been the most difficult to define and deal with. " "There seems to be an inability to find a consensus in all matters that affect our personal lives," Kuhlmann told an audience of financial leaders and consumer-advocacy groups Tuesday at the Hyatt at the Bellevue in Center City. The occasion was the annual community awards luncheon of the Philadelphia consumer organization Clarifi.

LOS ANGELES - The business of predicting the end of the world is a lot like baseball: Three strikes and you're out. At least that's according to the Christian Post , which reports that controversial Christian leader Harold Camping has retired after three failed doomsday predictions. The self-styled biblical scholar based in Oakland, Calif., has thrice predicted the world's end. First, in 1994. Then, on May 21 of this year. And again on Oct. 21. It is estimated by Camping's own staff that more than $100 million had been spent trying to wake up the world to his biblical predictions.

'Survey by housing group says owning a home still American Dream" Imagine if the news release bearing this headline, from the National Association of Home Builders, reported that no one wanted to own a house. Details of this survey arrived the same day Robert Shiller, the economist who cofounded the S&P/Case-Shiller Home Price Indexes, told a conference that a further price drop of 10 percent to 25 percent in the next five years wasn't out of the question. The economic model Shiller looked at was Japan, where home prices dropped for 15 years before hitting bottom.

Dear Harry: My employer has had a wonderful program of a Flexible Spending Account (FSA) for employees' medical expenses. I have allocated $2,000 a year to cover most of my uninsured costs. I have never left any of the money in the account at the end of the year, so none of it was forfeited. This year is a different story. I'm fearful that I may run short because of what I have just heard. Is it true that I may no longer be reimbursed for over-the-counter medicines that I take?

The stock market is lurching like a headless rooster, doing a death dance on our 401(k) accounts. And what about our savings accounts - pathetic as they may be? Are they safe? What's a worried investor to do? Yard work is an idea, according to one wealth manager. It's outdoors. There's no alarming television, and a hand on the rake is not pushing the sell button. The classic investment advice in a sinking market is, don't sell. If you do, you miss the financial replenishments that come with a rebounding market.

In most American homes, the rising cost of good health care - like the rising costs of gasoline and home heating - remains a perpetual kitchen-table discussion. It is especially front and center now as we are in the annual "open enrollment season," when employees decide which of their company's health plans they will choose for the coming year. This year, two underlying trends are catching the attention of consumers and industry alike, and it appears they will continue to shape the health-coverage market.

Rep. Dwight Evans (D., Phila.) has a good idea: Encourage banks to set up shop in communities neglected by full-service financial institutions. The concept is for the state to designate three pilot "banking development districts" where banks, credit unions, or savings and loans would get a tax credit for building branches. They would also be eligible for deposits from state coffers, provided they agree to have tellers, loan officers, and other standard banking services on site.

President Bush's proposed expansion of health savings accounts depends on a premise that research shows is questionable: that Americans want more financial choices in their lives. Experts point to a lack of participant activity within 401(k) plans as a sign that many Americans already feel overwhelmed by financial options. The 401(k) experience points to both the risks of HSAs and the road ahead for health-care management. Bush proposes to offer tax breaks to individuals who set aside pretax dollars in HSAs to pay their medical expenses.