In a statement issued this morning, the Central Bank of The Park warned financial institutions against offering high, short-term interest rates to their estivating clients.
“It is not in the interest of The Park nor of the client [for banks] to adjust interest rates for terms that occur during the dormancy period,” the Bank said.
The practice of offering high, short-term interest rates to hibernating and estivating clients has been in place for at least a decade, according to the Association of Financial Institutions of The Park (AFIP).
In fact, according to a report written by the Consumer Protection Agency of The Park (CPAP) and presented to the Central Bank, local banking institutions count on the fat deposits these rates attract to boost their bottom line.
“There’s no doubt that, at this time of year, the estivating client is the preferred customer,” says CPAP head, Ursula M. Bjørn. “These clients are going nowhere for a substantial length of time and, consequently, neither is their money,” she explained.
These so-called “dormant” accounts that are offered by some of The Park’s banks come with an interest rate of up to fifteen percent above the base rate that is established every quarter-year by the Central Bank.
“This [interest] rate is substantially higher than the rate that non-hibernating and non-estivating Animals are offered on any of their accounts,” says Uzoma Serval, author of the book, BankWoe.
“But, there is a catch,” he says.
“When the dormancy period ends for these Animals, they find they are not at liberty to withdraw their funds as they wish. They signed away that right, sometimes without even knowing it. And, their interest rate quickly plummets ten percent or more,” Serval says.
This has led to a rise in consumer complaints. And, non-hibernating and non-estivating Animals also have begun to complain about the practice. They say it is evidence of prejudice against them and that they are being treated unequally and unfairly by The Park’s financial institutions. It is a view the BankWoe author says may be difficult to dispute.
“The instruments of darkness tell us truths,” he says.