Liquid Accounts Proving Popular

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SAN ANSELMO, Calif. — New analysis shows that during 2009 and 2010, the deposit balance mix shifted from regular CDs to liquid accounts, mainly savings and money markets.

The analysis, from Market Rates Insight (MRI), found that savings accounts' balances gained the most in percentage relative to total deposits-an increase of 1.4% in the last two years. Checking accounts gained the least with an increase of 0.5%, and money markets accounts showed an increase of 1.4 % relative to all other deposit products. Balances of CDs of up to $100,000 decreased, relative to total deposits, by 1.6% in the last two years, the company said. On the other hand, balances mix of jumbo CDs (over $100,000) increased by 1.5% over the same time period.

MRI noted that balance mix is the relative percentage of each product balance out of total deposits (100%). The combined percentage of the liquid and term accounts in this analysis does not add up to 100% since some deposit products, such as IRAs, are not represented, it explained. "These findings reveal that in cases where there is no significant interest rate differentiation, such as between MM and non-jumbo CD, some consumers opt not to lock in their money," it said in its analysis. "Yet, in the cases of jumbo CDs, which offer higher rates, the incentive to lock money is greater."

"The message from bank consumers is clear." said Dan Geller, executive vice president at Market Rates Insight, "Commitment has a price."

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