Tidbits #12 – This isn’t your old bank’s free toaster.

mercedes amg gullwing brilliant silver

Get a Mercedes Benz when you open a [qualifying] new CD account!

On the surface, this seemed to be one of the best gimmicks “promotions” to attract new customers I’ve come across in a long time…   A Florida community bank called C1 Bank with ~1BN in assets is offering 2012 Mercedes roadster to new customers with FL residence who deposit 1MM or more in a 5-year CD, in lieu of $61K in interest they would have earned with the CD.  No, it’s not the AMG Gullwing pictured above, rather a new MB roadster worth ~60K.  But before you jump at it, here are the details of the deal and caveats to consider –

  • While better than 5-year treasury rate of .82%, the equivalent annual yield rate of 1.2% is not much better
  • Current CD yield rates are near their all-time lows, and many predict that it could only go up
  • FDIC only covers up to 250K in case the bank itself goes south
  • Lastly, for some reason if you need to re-neg on the 5-year contract, you will pay 3K in penalty plus the entire price of the car when it was new

It certainly begs the question – are you better off taking advantage of 0% financing deal offered by some luxury makers and putting your 1MM away in higher-yielding but just as safe debt instruments?  One thing for sure, even for deal that seem to be no brainer, it always pays to do some due diligence.  You decide…

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About Richard Lee
Experienced finance and operations professional. Currently partner in five companies, adjunct professor of economics at Columbia College and executive contributor to a small business blog (www.SMBmatters.com); following corporate finance, M&A and management consulting tenures with Orbitz and Diamond Technology Partners; and six years of service with the United States Army.

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