Old-Style Savings Account Attracts Modern Following

Believe it or not, the old-fashioned bank passbook account is making a comeback. That's the same kind of little bank book that you had as a kid, the one the teller stamped when you made a deposit.

Passbooks have gotten shunted aside in the era of go-go banking. Deregulation has brought about a bewildering array of CD and Money Market Accounts (MMA), all promising higher interest rates than the passbook paid, and catching consumers' eyes with gimmicks such as flexible rates.

Now, the picture is changing:

-- The gap between passbook rates and MMA rates has narrowed to less than a percentage point. Since the first of the year, the average MMA rate has fallen from 6.16 percent to 5.98 percent, while the average passbook has remained at 5.17 percent.

-- As the nation's baby-boomer population ages, it's slipping into a savings mode. To many, passbook accounts are a symbol of financial security, if not nostalgia.

-- The notion that passbooks are only for the elderly has disappeared. Increasingly, institutions are wooing a younger crowd.

The real key to passbook resurgence probably is that banks, thrifts and credit unions are finally focusing on ``mainstream savers,'' who represent large potential profits without the unpredictable, fickle loyalty of CD-rate shoppers.

``These are people who look at their savings as a nest egg and not as transaction accounts,'' said Dan Brigham, First Nationwide's vice president for public affairs. ``Their fundamental interest is in high yields and safety, plus easy access to their funds in emergencies.''

For the banking industry, big bucks are at stake. Currently, about six cents of every savings dollar sit in passbook accounts that come with that little book, or in statement savings accounts. The latter are a first cousin to the passbook; everything's the same except you don't receive a book, just a monthly statement.

``Most banks got out of the passbook account business several years ago because they are difficult to handle from an operations point of view,'' said Donald McGowan, president of Flagship Bank in Worcester, Mass. ``You need special automated passbook handling equipment in your branches, special software, and special systems for mail deposits.''

In Chester, Va., Pioneer Federal Savings Bank has geared its ``Premier Passbook'' promotion to young people ranging from grammar school through college age. The account requires only $200 to open and pays 6 percent, reported Eunice Lunsford, senior vice president of retail banking.

First Nationwide Bank, which is headquartered in San Francisco but has affiliates across the country, designed its ``Prime Yield Passbook'' with tiered rates, paying as high as 8.15 percent on deposits of $100,000 or more. Smaller amounts earn less, anywhere from 5 percent on $1,000 on up to 8.02 percent on $50,000.

Passbooks, added John Wightman, vice president of marketing at Attleboro Pawtucket Savings Bank, R.I.,``give you something tangible as a record of your account. Passbook deposit and interest entries are simple and easy to understand,'' he told Bank Advertising News. Through August, the bank is paying a one-half of a percent bonus rate on top of its regular 6.5 percent.

Consumers who have been fighting their way through the confusing CD rate jungle probably will welcome passbooks as a breath of fresh air. Some passbook deals even beat what you can earn on a one-year CD without the penalty on withdrawals.

With a passbook, you don't need a road map to figure which outfit pays the highest rate.

Plus, you get that little book to look at and tuck away in a drawer in case of a rainy day.