Free Mercedes with that bank account
A Florida bank is offering a Mercedes in exchange for a $1 million 5-year certificate of deposit.
This post comes from Kelli B. Grant at partner site SmartMoney.
A new offer from C1 Bank, a Florida community bank with assets of $827 million, promises new customers their choice of one of four new Mercedeses in exchange for depositing $1 million in a five-year certificate of deposit. "We've had lots of questions about it," says chief executive Trevor Burgess. "Nobody has taken us up on it yet, but we're only on Day Two."
It's not all that unusual for banks to offer big-ticket freebies in exchange for a hefty deposit. As we reported last year, Chase offered New York City customers who deposited $100,000 a bonus of two free front-row tickets for a sports match, musical or concert. That was worth as much as $1,000, the equivalent of a 2% rate. (Post continues below.)
"Typically, these kinds of schemes are about competition, getting customers and cash," says Dennis Moroney, a director of research at consulting firm Tower Group. He says the publicity value is likely higher than any real need for big-ticket deposits. "People who have a $1 million to put away for five years . . . probably already have a Mercedes or two," he says. (How much vehicle can you afford? Try MSN Money's calculator.)
But the C1 offer has one big catch. It's not actually a bonus, but rather prepaid interest on the 1.2% account, Burgess says. Consumers get what amounts to a $61,294.04 car (including tax, delivery and registration) instead of five years of interest, worth $60,000, reports Business Insider. "It's about instant gratification," says Burgess. Accountholders who withdraw funds early will get the balance less the cost of the car.
Of course, if you're in favor of deferred gratification, there may be more competitive rates. Bankrate.com lists 18 financial institutions offering higher rates on a five-year jumbo CD, with annual percentage yields of up to 1.8%. Five years is also a long time to lock in -- although the Fed has said rates are likely to stay low until at least the end of 2014, they will certainly go higher than they are now, Moroney says.
At the same time, the car's value will be depreciating. (Burgess says the rate is competitive, and has the advantage of keeping the money in the community to benefit local businesses and residents.)
More on SmartMoney and MSN Money:
This is downright stupid. Anyone that has 1M in the bank should know a thing or two about investing. Even in today's economy, you can get around 10% a year, if you invest well(amounting to over $100K/year). This grows over time as you make more money.
So why on earth would you opt for a $60K asset that's essentially 6% ROI over 5 years??? That's 1.2% - disgustingly poor performance. Not to mention this "asset" also DEPRECIATES incredibly fast. By the time your 5-year CD is done, this car is worth next to nothing.
Probably explains why the CEO said " "Nobody has taken us up on it yet..."
1.19688% APY on a million dollar, five-year CD? Calling all rubes!
Many, many community credit unions will offer you, on that principal for that term, an APY of between 1.85% and 2.05%. You can still keep the money in your community and at the same time almost double your vig by dealing with a credit union instead of a bank.
"Maurice L. Nissim, CIMA®
Senior Vice President - Investments
Advisory and Brokerage Services
Maurice manages the wealth of individuals with a net worth between 5 and 75 million dollars, and has done so since 1988. He is a CIMA designate and one of Barron's Top 1000 Advisors. He is also one of a select few managers for UBS Senior Portfolio Program. This allows him to invest and manage portfolios on a discretionary basis. Through careful assessment, solid planning, and an individually tailored strategy, Mo addresses the unique issues his clients face as they progress toward their goals."
Elmo, do you even know what a CD is, or are you always that paranoid?
This is just a publicity stunt, apparently one that worked.
Until that time the markets are going to be so unpredictable due to a free market. Once the FED has full control over the government again those of us with money will know where to invest our millions again. Look at how well the US economy was going right up until Bush had to leave office, if we would have voted the Republicans back into office in 2008 the US would be the strongest country in the world by now.
Okay, how many of you are laughing?
$1M with a 5% return on a investment for one year would give you $50k in 5 years $250k.
and you think a $60k car plus the taxes you would have to pay. Is a deal.
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