How do you spice up interest in certificates of deposit when the stock market is delivering record-high returns? Tie their rates to a stock index, of course.That's what Brentwood Bank is doing. The bank is offering Index Powered CDs, certificates of deposit with rates based on the performance of the Standard & Poor's 500 Index, which, it says has outperformed 90 percent of all equity funds over the past decade. Companies included in the Standard & Poor's 500 Index are American Express, Coca-Cola, Procter & Gamble, General Electric and Microsoft, among others.
The principal deposits on the CDs are guaranteed up to $100,000 by the Federal Deposit Insurance Corp. A $500 CD with a 10-year term, for instance, requires no management or sales fees.
Says Tom Baily, president of the bank: "It's a winning situation to combine the peace of mind of guaranteed principal while taking advantage of the stock market's potential enormous growth."