Answer: Financial institutions must receive approval from COLTAF for the rate they propose to pay on COLTAF accounts.

Explanation: COLTAF participation is voluntary for banks and credit unions . However, financial institutions that opt to participate must comply with COLTAF’s interest rate comparability rule. While the full rule is more complex, the short version of the rule is that COLTAF must receive a rate equal to the highest rate that a financial institution offers on any comparable deposit product. There are three ways to comply with our interest rate comparability rule:

  1. Complete the Prime Partner Enrollment form and pay COLTAF’s Prime Partner rate of 75% of the Federal Funds Rate or 0.50%, whichever is greater. Prime Partner banks are listed on the COLTAF website. Prime Partner status also comes with marketing support and Community Reinvestment Act documentation. Rate approval is automatic, with no follow-up rate reviews.
  2. Complete the Benchmark Bank Enrollment form and pay COLTAF’s Benchmark rate of 60% of the Federal Funds Rate or 0.35%, whichever is greater. Benchmark Banks are listed on the COLTAF website, but do not receive marketing support or Community Reinvestment Act documentation. Rate approval is automatic, with no follow-up rate reviews.
  3. Propose your own rate. Financial institutions that propose their own rate must submit to COLTAF a full rate sheet, listing the rates they offer on all deposit products. COLTAF will review the rate sheet and determine the highest rate offered on any comparable product. The financial institution must offer COLTAF accounts a rate equal to the highest rate it pays on any comparable deposit product. Banks proposing their own rate are subject to periodic re-evaluation of their rate after initial approval.