I’ve often thought that a really great financial product would be a combination high-interest savings, checking, mortgage and line-of-credit (LOC) account.
Basically you’d set it up, and could have your paycheck deposted in it or whatever. You’d get Prime-2% interest on your savings (4% currently, comparable to PC Financial or ING Direct). You could write checks out of it and pay bills and whatnot.
If you had been authorized for an UNSECURED, if your accont ever dropped below zero, instead of being charged overdraft or whatever, you’d suddenly go from being paid Prime-2% to PAYING Prime+1%. Just like a regular LOC, they’d expect $50 or 3% to be paid on it per month (or whatever) and you could keep paying bills and writing checks.
If you bought property, and borrowed money for it, you’d then have a SECURED LOC that would come before the unsecured. You’d get credit up to your equity (75% of the properties value) and the borrowed amount applied against this and pay Prime-1% (like a variable rate mortgage). If you ever exceeded the 75%, you’d switch into the unsecured and pay a premium on the “overflow”.
This would obviously be dangerous to people who can’t manage their finances, but the world shouldn’t be designed for the lowest common denominator. Banks profit on each of these products individually, so I imagine they’d do ok with them all combined (and have ALL of that customers business). It would be much easier for the customer to manage their finances with 1 account instead of three.
Any ideas on how I can set up my own bank and offer this? 🙂