Calvert Seems to Have a Winner in Novel CD With Insurance That Breaks

Calvert Group has done a brisk business in brokered certificates of deposit since it introduced a gimmicky product that gives customers three times the usual amount of federal deposit insurance coverage.

The Bethesda, Md.-based money management firm began actively marketing the Calvert Insured Plus Account last June. Since then deposits have more than tripled, to $267 million.

The product has benefited from higher yields on certificates of deposit, but the real attraction for consumers has been the extra deposit insurance.

Normally, certificates of deposit are insured by the Federal Deposit Insurance Corp. for up to $100,000. But Calvert has devised a way for deposits in excess of that threshold to be fully insured.

CD assets are spread across three banks. Customers receive coverage from Acacia Federal Savings Bank, Annandale, Va.; First National Bank of Chicago; and FCC Bank, Wilmington, Del.

The money market certificate is pegged to the 90-day Treasury bill rate and is currently yielding 5.26% - higher than the national average of 2.85% for bank money market accounts, according to Bank Rate Monitor, North Palm Beach, Fla.

Though the concept for the Calvert product isn't new - consumers could spread the money themselves across however many banks they want - the product provides a consolidated statement and allows customers to write checks against their accounts.

"We are directly positioning this as an alternative to a bank CD or money market account," said David S. Rieben, director of national sales for Calvert.

Calvert sells the Insured Plus Account through financial planners and registered investment representatives.

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