For those consumers who have any money left after they look at the falling value of their homes and the huge credit card balances, Capital One (NYSE: COF) is prepared to offer reward points for money market deposits. Who says the froth is being squeezed out of the economy?

The Rewards Money Market, as it will be called, has an interest rate of 4.65% and will offer an airline mile for every $20 on deposit. According to The Wall Street Journal, Capital One insists that the new program has nothing to do with strengthening its deposit base during

a duration when banks are having problems with their mortgage portfolios. It is a matter of opinion whether Wall Street will believe that.

The fact remains that “safe money” like savings detail deposits are desirable for banks particularly while the domestic lending and credit card markets are in trouble. Capital One closed its wholesale mortgage unit final month.

And, most consumers would rather have airline miles than a free toaster.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Original post by Douglas McIntyre

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