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December 17, 2021

Would you accept products in lieu of your CD interest payout?

A new deal with some serious intrigue has popped up at the Central Pacific Bank in Hawaii.

In lieu of interest payouts on certificates of deposit, the bank has struck a deal with Sony to offer premium electronics to its clients.

At the outset, your first thought is, This is stupid. It’d be short-sighted to take material goods instead of showing some patience and collecting interest once the term is complete.

But let’s do a little digging here; it might not be such a wild idea, after all.

For starters, the deal: Central Pacific will hand out various electronics for – of course – varying investment denominations. For example, a US$15,000 12-month CD will get a Sony PSP instead of interest, a US$25,000 CD will land you a Blu-ray home entertainment system instead of interest, etc.

(How early withdrawal penalties would work, or why you wouldn't just buy the goods with your up-front money isn't discussed, but you can check out the full offer here.)

The big prize with Central Pacific is this 52-inch Sony Bravia LCD TV. Retail tag: about US$1,300.

In order to get the TV, you’d need to invest $100,000 for one year with the bank, which you might not think is a great deal.

Yet let’s transfer that hypothetical to Canada and see if you might look at things differently. Consider at most banks, like TD Canada Trust for instance, the return on a $100,000 CD/GIC over 12 months is just 0.60 per cent, or 600 bucks.

So, would you rather have an HDTV with a $1,799 Canadian retail tag, or a tax-susceptible $600 in interest after one year?

Of course, this deal hinges on whether someone is in the market for a television or Sony product (and would be the type of investor to take out a CD/GIC instead of purchasing blue-chip stock with their spare hundred grand), but on paper – you have to admit – it’s not as crazy as it seems.

For now, this arrangement seems exclusive to Central Pacific Bank, but if other institutions were to adopt such a contract, might you give it some thought? Would you accept gifts or products in lieu of a year-end interest payout from a CD or GIC?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

James HaversJames Havers

James is the senior editor of MSN Money living in Toronto. He has worked for the Nikkei Shimbun (Tokyo),,, Canadian Business and other publications. Havers turned to journalism after teaching overseas.

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...