Zero % Certificate of Deposit anyone?

Posted by R. C. White on March 14, 2009, 9:47 pm

Please log in for more thread options

Hi, All.

Compass Bank, recently renamed to BBVA Compass Bank, is now advertising a
zero-percent CD here in Central Texas. At least, that's how I read this
blurb from their email, echoing their ad in last Sunday's Austin
American-Statesman:

<paste>
Introducing the Power CDSM from BBVA Compass

The equity-indexed Power CD protects your principal and provides the
potential to earn 6% APY each year during the term.*

Additionally, you'll enjoy:

Five-year time deposit
Full return of principal at maturity
Principal insured up to FDIC limits
Principal amounts deposited in the Power CD will earn an annual interest
payment of
6% APY each year during the term that the S&P 500 Index is equal or higher
on an anniversary date, than the S&P 500 Index on the issue date.*
Otherwise, no interest payment will be made for that year, but your
principal remains protected.

This offer is only available through Thursday, March 19, 2009.
</paste>

As I read it, Compass does not promise any interest at all. IF the stock
market is higher a year from today, they will pay 6% (in a check, not
compounded) for that year. But if the market is down on the anniversary
date, they pay NO interest for that year. But they do promise to refund all
my principal in 5 years, guaranteed by FDIC.

Any takers?

RC
--
R. C. White, CPA
San Marcos, TX
(Retired. No longer licensed to practice public accounting.)
rc@grandecom.net
Microsoft Windows MVP
(Using Quicken Deluxe 2009 and Windows Live Mail in Win7 x64)

Posted by Jerry Boyle on March 15, 2009, 6:17 am

Please log in for more thread options

Hi RC,

Last September 3-month T-bill yields fell briefly into negative territory.
They promised to give you *almost all* of your money back with no
possibility of getting it all back. This deal looks pretty good by
comparison.

Jerry

> Hi, All.

> Compass Bank, recently renamed to BBVA Compass Bank, is now advertising a

> zero-percent CD here in Central Texas. At least, that's how I read this

> blurb from their email, echoing their ad in last Sunday's Austin

> American-Statesman:

> <paste>

> Introducing the Power CDSM from BBVA Compass

> The equity-indexed Power CD protects your principal and provides the

> potential to earn 6% APY each year during the term.*

> Additionally, you'll enjoy:

> Five-year time deposit

> Full return of principal at maturity

> Principal insured up to FDIC limits

> Principal amounts deposited in the Power CD will earn an annual interest

> payment of

> 6% APY each year during the term that the S&P 500 Index is equal or higher

> on an anniversary date, than the S&P 500 Index on the issue date.*

> Otherwise, no interest payment will be made for that year, but your

> principal remains protected.

> This offer is only available through Thursday, March 19, 2009.

> </paste>

> As I read it, Compass does not promise any interest at all. IF the stock

> market is higher a year from today, they will pay 6% (in a check, not

> compounded) for that year. But if the market is down on the anniversary

> date, they pay NO interest for that year. But they do promise to refund

> all my principal in 5 years, guaranteed by FDIC.

> Any takers?

> RC

> --

> R. C. White, CPA

> San Marcos, TX

> (Retired. No longer licensed to practice public accounting.)

> rc@grandecom.net

> Microsoft Windows MVP

> (Using Quicken Deluxe 2009 and Windows Live Mail in Win7 x64)

Posted by Han on March 15, 2009, 7:03 am

Please log in for more thread options

> Hi RC,

> Last September 3-month T-bill yields fell briefly into negative

> territory. They promised to give you *almost all* of your money back

> with no possibility of getting it all back. This deal looks pretty

> good by comparison.

> Jerry

>> Hi, All.

>> Compass Bank, recently renamed to BBVA Compass Bank, is now

>> advertising a zero-percent CD here in Central Texas. At least,

>> that's how I read this blurb from their email, echoing their ad in

>> last Sunday's Austin American-Statesman:

>> <paste>

>> Introducing the Power CDSM from BBVA Compass

>> The equity-indexed Power CD protects your principal and provides the

>> potential to earn 6% APY each year during the term.*

>> Additionally, you'll enjoy:

>> Five-year time deposit

>> Full return of principal at maturity

>> Principal insured up to FDIC limits

>> Principal amounts deposited in the Power CD will earn an annual

>> interest payment of

>> 6% APY each year during the term that the S&P 500 Index is equal or

>> higher on an anniversary date, than the S&P 500 Index on the issue

>> date.* Otherwise, no interest payment will be made for that year, but

>> your principal remains protected.

>> This offer is only available through Thursday, March 19, 2009.

>> </paste>

>> As I read it, Compass does not promise any interest at all. IF the

>> stock market is higher a year from today, they will pay 6% (in a

>> check, not compounded) for that year. But if the market is down on

>> the anniversary date, they pay NO interest for that year. But they

>> do promise to refund all my principal in 5 years, guaranteed by FDIC.

>> Any takers?

>> RC

>> --

>> R. C. White, CPA

>> San Marcos, TX

>> (Retired. No longer licensed to practice public accounting.)

>> rc@grandecom.net

>> Microsoft Windows MVP

>> (Using Quicken Deluxe 2009 and Windows Live Mail in Win7 x64)

Until this crash, a yield of 6% on the S&P 500 was pretty easy over the
long haul. I would predict that the SP500 will yield quite a bit more
tha 6% over the next 5 years. Please note that only I am responsible for
my predictions, and I will not do anything but apologize if they are not
fulfilled. If my predictions are correct, I will gloat <smirk>.

--
Best regards
Han
email address is invalid

Posted by JimH on March 15, 2009, 11:19 am

Please log in for more thread options

R. C. White wrote:

> Any takers?

Market linked CDs are not new. I wish I had gotten in on the one that my
broker offered a while back. It was linked to the Dollar-Euro exchange
rate. It made a bundle.

This one doesn't sound all that bad. My credit union has .2% on a
regular savings account. After taxes, that works out to about .15%. That
is $150.00 return each year on a $100,000 account.

My brokerage account is down over 30%. My 401K is down 15%. With this,
there is s decent chance to make 6%. Worst case, you make 0 and don't
have to pay any taxes on it.

Just don't put all your eggs in one basket, unless of course you've
already lost all your eggs. In that case, sell the basket on EBay.

--
Jim