Add First of America Bank Corp. to the rapidly growing group of banks offering certificates of deposits with payouts linked to the stock market.
The Kalamazoo, Mich., bank's Market Rate CD promises customers the same two-year return as the Standard Poor's 500 index.
The CD, which First of America introduced early this month, gives customers "the opportunity for a higher return without higher risk," said spokesman Tony Thompson.
Banks have seen an outflow of CD money as investors search for better returns.
First of America's regular Cd's are yielding 3% or less. The bank said its Market Rate CD would have averaged 4.94% annually over the past two years, based on the S&P's performance during that period.
The Market Rate CD is guaranteed by the Federal Deposit Insurance Corp., meaning that customers cannot lose principal. But customers will not earn any interest if the S&P declines over the 24-month period.
The CD is available at all 300 First of America branches.
