Banks are getting very creative in an effort to capture deposits in this low interest rate environment for bank deposits. Starting today, EverBank is offering a unique certificate of deposit product called the “MarketSafe Evolving Economies CD.” This limited time CD (offer ends October 9th) provides access to the full upside potential of four emerging market currencies, including the Colombian peso, Turkish lira, Mexican peso and Indian rupee. The CD is 100% principal protected and has a bold payment structure. In brief, gains on the CD will be driven by the equally weighted performance of the currency indices over the CD’s 5-year term. To measure performance, EverBank will utilize 10 total pricing dates over the 5-year period. If the currency indices outperform the dollar, the minimum return is 15%, as EverBank has set this figure as the CD’s minimum upside payment. So any gain by the currency indices above 0% and up to 15% will result in a 15% market upside payment. If the gain is better than 15%, the depositor gets that figure since there’s no limit on the CD’s upside potential. Of course, if the currency indices don’t rise the return will be 0%. Everbank is touting this interesting new product as a way to diversify and seek potential gains from the currency market.
We encourage interested depositors to read the bank’s term sheet and make sure they fully understand the mechanics of how it works. Looks like there may be more of these creative products in the future since depositors are not going to see the benefits of rising rates for a while.