In order to stay competitive, our Retail Department is recommending that we adopt a strategy similar to our competitors - creating a new accout to pay higher rates where in the long run all the rates end up back in their customary relationships. The new account would be a Money Market Checking and the creation of different interest rate tiers, similar to the Money Market account. The proposal is four 4 tiers: Below $25,000, Below $50,000, Below $100,000 and Above $100,000. For the customer, this can be an account that handles both their checking account needs and their liquidity investment needs.

Are there any regulatory concerns, besides Reg D limitations, that I should be concerned with?

Thank you.

If you classify this account as a NOW or Super-NOW account so that it is considered a transaction account, you won't have Regulation D transaction limit problems (although it will obviously affect your bottom line). But you'll have to restrict ownership to those eligible for NOW accounts.

If you classify it as a savings/money market account and apply the Reg. D transaction limits for savings accounts, you won't have ownership concerns, but you limit its appeal for those looking for a checking account. Because it isn't a checking account, period.

Be aware of the rules in Regulation DD on advertising rates on tiered accounts.

Thank you.