Thought Leadership

CDs Are Bringing Sexy Back

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April 8, 2019
CDs Are Bringing Sexy Back
By Bryan Adler

CDs, although held by notoriously rate-sensitive consumers, have served financial institutions well when they’re in need of liquidity. They’re great low-risk investment options for customers and liquidity for banks to use to fund loans. It’s a symbiotic relationship. Most financial institutions have started marketing higher interest rates to draw in consumers, so how can your bank or credit union differentiate itself from all the other ads with APYs in 200-point font?

CDs aren’t sexy, so how do you differentiate yours from myriad others strapped for funds right now? In a word, messaging.

CDs can also have a strong place in your B2B strategy, especially with small- to midsize businesses. These companies can be cash-strapped and may be looking to your bank for loans to generate the capital to grow or get started. CDs for your business companies can serve as collateral to help them also secure loans from your financial institution. Both sides are gaining returns on the investment. Demonstrate that your financial institution was once just starting out and understands the struggles they’re facing.

Another solid strategy is to build a campaign around long-term investments for your younger customers. What are their aspirations, and how can you help make them a reality? You may want to focus your marketing on longer-term strategies, like laddering, and sell the idea of relatively low-dollar investments in rolling, shorter-term increments for flexibility but still a positive outcome. Help them understand that CDs are a viable product to save for larger purchases down the road, such as a down payment on a home or car. By building these deposits and helping these customers reach their goals, you’ll win their long-term trust and cultivate customers for life.

CDs can also be great vehicles for new parents to begin saving for their child. How many people have college funds that are just savings accounts? Why not market CDs as an alternative for investments that could be sitting for a longer term at a higher return. Or as a better alternative to grandma’s savings bonds. Additionally, a CD will give the family flexibility over other vehicles, like state-sponsored accounts, if the child decides not to go to college. Show them their life – and their child’s life – opportunities.

CDs are a great option in these times of tight liquidity and consumers starved for higher interest rates than they’ve gotten in a decade. By working with your customers to use this tool to meet their long-term goals not only creates additional value and deposits, it differentiates you from your competition. Customers want to do business with a bank that exists to help them, and by educating customers on what these strategies can do for them, CDs might just become the sexiest products on the planet.

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