Crossbreeding Comes to the CD: Banks Offer Hybrid Certificates of...
Because returns on certificates of deposit are so low, some companies have tried to make them more attractive by h</br></br>Because returns on certificates of deposit are so low, some companies have tried to make them more attractive by h ) linking them to more profitable, but riskier, indicators. Here are three examples of some unconventional CDs:</br></br>NationsBank offers a CD linked to the performance of the stock market, as measured by the Standard & PoorÛªs 500 stock index. This example assumes a $10,000 investment at the beginning of1988, fora period office years:</br></br>Blackfeet National Bank offers a tax-deferred CD that matures after the owner reaches age 65. Part is then paid out as a lump sum; the rest is paid in monthly installments for the rest of the owner's life. This example assumes installments of $93.47, or 216 payments, which last until the owner is 83. However, the bank continues to make payments if the owner lives longer</br></br>College Savings Bank offers a CD with an interest rate based on the inflation rate of college tuition. This example shows three possible scenarios for growth in this CD, assuming an initial investment of$2,129: