A Philadelphia community bank plans to use the Internet to let customers set their own rates on short-term certificates of deposit.

Starting next Monday, Bank Philadelphia will offer 12-month CDs at rates to be determined on-line by auction-style bidding. The thrift expects the novel move to attract national attention to www.usabanc.com, the Web site operated by its parent company, USABancShares.

"Rather than banks dictating what rates should be, on-line customers will now be able to set rates themselves," said Kenneth L. Tepper, president and chief executive officer of the $192 million-asset company.

"The auction process is already incredibly successful on the Internet, and it's time that our industry follows with banking products."

Indeed, companies such as Priceline.com Inc. of Stamford, Conn., have been phenomenally successful allowing customers to name their price on products such as airline tickets.

Dave Koto of Brintech Inc., a New Smyrna Beach, Fla., bank technology consulting firm, said this is the first time he has seen a banking company try it. "I think we are going to see a lot of this going forward," Mr. Koto said.

BankPhiladelphia will start the bidding next week by posting an above- market ceiling rate-perhaps 10%, Mr. Tepper said. But consumers' responses will determine the actual rate to be paid.

Would-be investors will be asked to declare the lowest rate they would accept. After an hour the thrift will offer CDs at the lowest figure bid.

The offer will go to the 100 lowest bidders; the rest will lose out. The minimum investment will be $1,000 and the maximum $10,000.

If the bidding is not competitive, BankPhiladelphia could be stuck with some high-priced deposits. But Mr. Tepper insisted that the thrift's exposure is "extremely minimal."

At most, BankPhiladelphia would be committed to $1 million in high-rate CDs per week, which he said would be "a fraction" of its overall business.

And if the final rate is too high, the thrift can always start the next week's bids at a lower rate.

Regardless, BankPhiladelphia expects to benefit from people visiting its parent's Web site. The thrift company has a separate deal with New York- based DoubleClick Inc., an Internet ad placement service, to sell advertising on the site.

"Bankers are missing out on the Internet as a marketing tool," Mr. Tepper said. "If people like what they see, it is easy for their friends to come, too. We believe this site is going to get a lot of traffic."

The Web site went live April 19 and attracted more than 50,000 hits during its first week. As features are added, the company aims to snag millions of visitors each day.

If they come, advertising revenue could offset high rates paid on CDs, Mr. Koto said. "Anything that attracts attention to your Web site is positive," he said. "That's the secret to the Internet."

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