3-6-3 RULE
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An old banking adage: pay 3% on deposits, lend at 6%, and be on the golf course by 3 o’clock—shorthand for traditional bank spreads.
Summary
The 3-6-3 Rule was a humorous banking motto from the mid-20th century that described the simple, profitable business model of traditional banks. Banks would pay depositors 3% interest, charge borrowers 6% interest (earning a 3% spread), and finish work early enough to be on the golf course by 3 PM. This rule represented an era when banking was less competitive, heavily regulated, and operated with predictable profit margins. The saying highlights how banking used to be a straightforward business with guaranteed spreads, before deregulation, increased competition, and complex financial products made banking much more challenging and competitive.
Usage Context
Understanding this term is important when studying the evolution of banking, interest rate management, and how deregulation transformed the financial industry from a simple, predictable business into a complex, competitive sector.
Common Confusions
- Thinking this rule is still relevant or applicable to modern banking
- Believing that all banks historically operated with exactly these percentages
- Confusing this with current banking regulations or requirements
- Assuming the 'golf course by 3 PM' part was literal rather than metaphorical
