With interest rates hovering at historical lows, it's tougher than ever for banks and thrifts to market their certificates of deposits. Thus many have resorted to special gimmicks and promotions, with the 1992 election season providing the most common theme. Consider:

* Bank of Boston Corp. is running red-white-and-blue ads for its two-year "Washington CD," which is tied to the presidential contest. If voter turnout in Massachusetts exceeds the total of four years ago, Bank of Boston will add 10 basis points to the interest rate. That would bring the current annualized yield to 4.96%.

* In another play on the election hoopla, Fidelity Federal Bank, Glendale, Calif., is offering - for the third time since 1984 - an "Election Day CD" that matures on Nov. 3. Yielding 3.77%, the CD provides customers with short-term parking for their money and the freedom to reconsider their options if interest rates rise after the election.

* Taking a nonpresidential tack, St. Paul Federal Bank in Chicago promises a 1% cash bonus to those who open a two-year certificate and another 1% if it is renewed at maturity. The potential annualized yield is 5.20%, assuming reinvestment of the initial cash bonus.

Dealing with Sticker Shock

All three banks report positive results from their campaigns but acknowledge that it is tough to overcome consumer resistance.

"It's like buying a car: People are experiencing sticker shock. It wasn't that long ago that we were paying 5.5% on passbook savings," said Thomas J. Rinella, senior vice president, marketing, at St. Paul Federal.

"Everybody's parking their money short," Mr. Rinella added. "The inflows of money into the passbook and money market accounts have been pretty heavy. People are reluctant to lock into CDs."

Banks and thrifts are spending 15.6% of their newspaper advertising money to promote CDs and other fixed-rate deposit instruments, down from 41.8% in 1989, according to Voice Trak, a Tucson, Ariz., marketing research firm that surveyed 25 newspapers around the country.

Only home equity loans are getting a bigger piece of the pie - 21.8%, up from 16.6% last year, said Voice Trak. The share going to promote investment and insurance products rose to 6.7%, from 4.7%. Newspaper ad spending from consumer loans jumped to 6.3%, from 2.9%.

The trend can be seen clearly in Atlanta, one of the nation's most competitive banking markets. Not one of the major banks in Atlanta is running CD ads.

Wachovia Corp. publishes a weekly rate card for all its deposit products, but doesn't highlight CDs in particular. Instead, Wachovia's recent advertising touted its credit card.

"With the rates where they are, I don't know that any aggressive advertising for CDs would be especially beneficial," said Robert C. Copeland, senior vice president of marketing in Atlanta for Wachovia, which is based in Winston-Salem, N.C. "You're probably better off spending your advertising dollars on products that the consumers might be more interested in right now."

NationsBank Corp., Charlotte, N.C., is promoting home equity, business, and consumer loans. "The advantage to the consumer in a low-rate environment is on the lending side, so we've chosen to pursue the positive aspects of the low rates, said Grant O'Neal, senior vice president and director of advertising.

Meanwhile, Atlanta-based SunTrust Banks Inc. is gearing up for a compaign supporting its new line of mutual funds. First Union Corp., Charlotte, prefers image advertising.

St. Paul Federal, with $ 3.5 billion in assets, is trying to pull in two-year money to offset its net outflow of deposits, according to Mr. Rinella. Since the program started at the end of July, the thrift has acquired $ 14 million in new deposits, he said.

"We're not looking to bring in a lot of new deposits per se, but we're trying to stabilize it," Mr. Rinella said.

Bank of Boston declined to specify how much money its CD campaign had brought in during the past five weeks. But Kendall Reed, director of retail marketing, said the purpose was to hold on to deposits, not build them.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.