HOUSTON BUSINESS REVIEW

How To Get The Most Out Of Your Money
By Jim Stein

Mr. Stein, President and CEO of Bank of Houston, is a frequent guest and co-host of the Houston Business Show. His extensive knowledge and experience has helped him to serve in senior bank officer positions and on the Board of Directors of Columbus State Bank, Central Texas Bankshare Holdings, Inc., Texas Bankers Association, Momentum Capital Corporation, and Bank of Houston.

For more information on Bank of Houston and Mr. Stein, please visit their website at www.bankhouston.com.

Ever wonder what would be the best way to invest your money? Let me tell you a little bit about your choices. For our customers in the need of liquidity through bank deposits, there are basically four different types of accounts at Bank of Houston in which you will receive interest, which include:

• NOW Account
• Savings Account
• Money Market Account
• Certificate of Deposit

A NOW (Negotiable Order of Withdrawal) account is a checking account which also pays you interest. The interest rate for a NOW account is a variable rate and can change at any time. Typically banks pay a relatively small return on NOW accounts in return for unlimited check writing capabilities.

If you want an account that will not be used as much as a checking or NOW account, a savings account might be the right choice for you. A savings account is a deposit account intended for funds that are expected to stay in for the short term. The interest rate for a NOW account and a savings account are about the same. At Bank of Houston, only six quarterly withdrawals are allowed on a regular savings account.

A money market account is a savings account that offers a higher rate of interest in exchange for a larger deposit balance. Money market accounts place restrictions on the amount of transactions you can make in a month. At Bank of Houston, only 6 transfers are allowed from the account each month, of which only 3 can be checks to 3rd parties. Furthermore, in money market accounts you usually have to maintain a certain balance to receive the higher rate of interest. At Bank of Houston, in order to accrue interest, the daily collected balance must exceed $2,500. The money market account is tiered where the more money you have in the account, the greater the interest rate you will receive.

A Certificate of deposit (CD) is a great way in invest your money if you do not need your money immediately. A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty. Certificates of deposit usually offer the highest rate of interest that you will receive from a bank. CD’s are different from savings accounts in the fact that CD’s are for a specific, fixed term and for a fixed interest rate. A CD is intended to be held until maturity, at which time you may withdraw the money along with the accrued interest.