Dear Bruce: I opened a sizable money-market account at a local bank. A couple of months later, I noticed an ad in the paper from this same bank advertising a money-market account with a different title, with an interest rate of 1 percent more. I called the bank to see if my money-market account interest rate also was increased, and they said no. I have always thought that money market accounts adjust to pay the current short-term interest rate. I see the above practice as something of a scam, allowing the bank to attract new money without paying their existing customers the prevailing rate. I told them so when I withdrew my funds. Am I wrong to be displeased with their business practice? -- R.C., Ventura.
Dear R.C.: You say that you opened a "money market" account. That is the name that the bank has titled it. They started calling them money market accounts to go into competition with "money market mutual funds," which is an entirely different animal. In a money market mutual fund, you own shares that will go up and down with the rate of return on the fund.
A money market account is simply a savings vehicle for an agreed-interest rate. Some do adjust, most do not. On the other hand, if interest rates were to fall on a money market mutual fund, the rate of return would diminish. In your bank account you will get whatever the agreed upon return was until the end of the time period. I don't think your quarrel is with the business practice as much as your confusion of terms.
Dear T.S.: I sympathize with you to the extent that most of us don't read all the debris that is included with our statements. We generally go over the statement, write a check and then get on with our life. I'm curious about a couple of things. Why did you close the account with a balance? Why not just keep it open and pay it until it's completely paid down? Secondly, I'm very puzzled that you noticed this "scrap of paper" that says there's a rate increase unless you wrote them not to. They are not allowed to increase the rate unless you do something or fail to do something. The failure could be to pay another account on time. Many credit card contracts allow them to raise the rate that you're being charged if you're in default anywhere. Unless I had much more information, knowing under what terms they raised the rate, there's nothing I can do to help. You also suggest that you never had an agreement with the assuming bank, but I'm going to deduce that you very likely do. Your first credit card agreement in all likelihood was fully assignable and you agreed to that when you opened that account. You can sue anyone for any reason, but I doubt under the conditions you've outlined, you'd be successful.
Dear Bruce: My wife and I have helped her out-of-state parents financially because of their unfortunate decisions in the stock market a few years ago. We loaned them enough money to get in a small condo with payments they can afford in exchange for a percentage of ownership in the place based on the percent of value that our loan represented of the purchase price. Our lawyer drew up a contract we all signed that would prevent any haggling with my wife's siblings after her parents pass. We're to receive the above percentage of the ultimate sales price at that time and any proceeds would go to her parent's estate. We have agreed to pay for any improvements made to the condo based on the percent ownership. The parents pay the entire mortgage payment along with taxes and insurance. Do we have any obligation, moral or otherwise, to pay the taxes or insurance? -- D.T., Owensboro, Ky.
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