A foreign bank took up a full page advertisement that it is giving 1.88% interest on its saving account to its current account holders. It tabulated a table to show the 'fantastic' high interest rate when compare to other banks, which pay 0.1% and 0.25% p.a. respectively for their current account and fixed deposits. The table uses $25K as illustration. So other banks are giving a mere $25 and $62.50 p.a. for their current and fixed deposits respectively, while this bank interest is $470 p.a.
Looks attractive, but hold on - there is a catch. To qualify, one has to spend $500 per month using the bank's card (I presume it refers to credit card). Besides this, the maximum qualifying amount is limited to $25K only.
Now the sum does not work out. Might as well save this amount instead as one would be $6K richer at the end of the year. Why spend $6K to get $450 interest ? As the bank limits the amount qualifying for the special interest rate, the bank has all the good deals at its end.
This is the type of tricks used by many banks. They highlight the attractive interest rate which has many qualifying causes. They are not simple saving or fixed deposit account. The interest rate could be spread over 5 years which would greatly reduced its attractiveness. Even our neighbourhood banks are doing this. How many uncles and aunties are tricked ? Dishonest ? Well, legally it is not. Ethical ? I would say NO!