Chicago's Peterson Bank is trying to cash in on World Cup hype with a certificate of deposit that promises to double the interest rate if the U.S. soccer team wins the championship.
The $165 million-asset neighborhood bank hopes to bring in as much as $10 million in deposits with the new product, which hit the streets about a week ago.
"I think it will bring in some new people," said Mark Rubert, president of Peterson Bank.
Tying CD rates to sporting events is not new, but Mr. Rubert says Peterson's CD is unique because it guarantees to double the rate.
"I haven't seen anything like that," said Michael W. Riley, managing director of the Bank Marketing Association, an affiliate of the American Bankers Association.
Peterson Bank's World Cup CD has a one-year term, requires a minimum balance of $2,000, and pays 4.4% interest. The CD will be offered until June 17 when the World Cup games begin in the United States. Here's the rub: The odds of the U.S. team winning it all are 80 to 1.
'A No-Lose Situation'
"From a customer point of view, it is a no-lose situation," Mr. Rubert said.
Mr. Rubert said some customers have already bought the CDs, but he didn't have the numbers.
Industry experts have mixed reviews of such programs. Some think they are a good way to bring in new customers, while others say they are gimmicks.
"I think it is very inventive, very clever," said Jim Copacino, senior vice president and associate creative director of McCann-Erickson World Wide, a New York-based advertising agency. "It really does break a bank out of the pack. It is a good example of what banks should do more of."
One banker said customers are "no longer going for these things. Banks are trying to build relationships; I don't know how it necessarily fits in with the long-term goals of the bank."
Company to Underwrite CDs
Peterson Bank has contracted with a Cincinnati-based insurance company to underwrite the CDs in the unlikely event the U.S. team should win.
"We have no risk in it at all," Mr. Rubert said.
Kevin Tynan, president of Tynan Marketing, a Chicago-based firm that specializes in bank marketing, came up with the idea for the World Cup CD. These products "enhance the value of the CD and help the small bank compete with the majors," Mr. Tynan said.
Mr. Tynan said customers aren't gambling by opening a CD whose interest rate could rise on the outcome of a soccer match.
As for Mr. Rubert, he'll be tuned into the games.
"Surprisingly, we hope the U.S. wins," he said.
