Dedicated to Deposits: Deals, Data, and Discussion

EverBank's World Currency CDs - My Interview with EverBank's Executive Frank Trotter


I've done several posts on EverBank's 6.01% checking and money market account promotions (see post), but I haven't covered some of their other banking products that are pretty unique. One in particular is EverBank's World Currency CDs.

A PR agent of EverBank recently contacted me regarding EverBank's recent launch of a new World Currency CD called the World Energy Index CD, and she offered me an opportunity to interview EverBank's Executive Vice President Frank Trotter. So I did a little investigation into these World Currency products and emailed some questions. I didn't want to ask all general types of questions that you might see in a newspaper. Instead I wanted to make sure I included some questions that will be of interest to readers of this blog who are concerned with risks, fees and account security.

First, I should mention a few important points regarding these World Currency CDs. Unlike the typical CD, there is risk of a loss of principal due to changes in currency exchange rates. It's intended to be more of a longer term investment product and only part of your overall portfolio. Even though the terms are 12 months and under, you can continue to let the CDs renew without being charged the currency conversion fee. For those who think the dollar will continue to fall, this may be a good way to diversify your portfolio.

My Q&A's with EverBank's Frank Trotter:
  • Question: I've read that EverBank has a long history in currency accounts. Is that correct? And what makes this appealing to investors?

    Response: EverBank acquired the WorldCurrency business from Mercantile Bank in 2000 but the core of the EverBank World Markets management team had founded the service at Mark Twain Bank (acquired by Mercantile) in 1986.

    WorldCurrency deposits allow investors to diversify a portion of their portfolio into foreign currencies that they select. We feel that between 10 and 20% of a properly constructed portfolio should be allocated to the currency market as a tactical hedge against a decline in worldwide purchasing power. At EverBank we consider our products to be a toolkit for a globally oriented investor.
  • Question: How does the WorldCurrency CDs differ from the typical bank CD?

    Response: WorldCurrency CD's are denominated in the currency of the customer's choice and pay interest at the local currency rate. Depositors benefit when a currency appreciates against the US dollar (the US dollar weakens) and can conversely lose a portion of principal if the US dollar is stronger against their chosen currency.
  • Question: How is the WorldCurrency Index CD and in particular the new World Energy Index CD designed to help investors?

    Response: The WorldCurrency Index CD's were designed to allow an investor to gain additional diversification while reducing the minimum required to participate. Through time EverBank has developed a number of Index CD's that provide an investor with the opportunity to follow an investment theme within a single instrument.

    The World Energy Index CD is a great example of an investing theme. In this case we have taken 25% each of the British Pound, Norway's Krone, along with Canadian and Australian dollars to build the index. All four countries are non-middle eastern energy producers and as this industry we believe it will provide strength to each country's currency. Our friends at the Daily Reckoning ( summed it up in editorial, "Lots of factors sent it soaring. But with energy in short supply, England's vast share of the North Sea oil riches look almost as good as the gold-backed greenbacks of yesteryear. The same goes for Norway's Krone... Canadian dollars, backed by Alberta fields and oil sands... even Australian dollars, backed by vast stockpiles of coal, gas, and - of course -uranium."
  • Question: The interest rate is guaranteed during the term, correct? But the change in the currency value isn't?

    Response: Correct - the interest is paid in the currency of the CD. The value at maturity is determined by the price of the relevant currency if and when converted US dollars.
  • Question: How does the 1% currency conversion rate affect the total return? Wouldn't it affect a 3-month CD more than a 6-month CD?

    Response: Most of our customers look at currency investing as an intermediate to long term asset allocation decision; we have some who have been rolling Swiss franc CD's over since the late 1980's! There is no conversion when a CD is rolled over to the same currency or placed in a WorldCurrency Access MMDA account.

    We have consistently been noted as having the best currency conversion rates for retail investors. Our disclosure quoted above provides room for any outliers but conversion generally occurs at 3/4 of a percent or less depending on the liquidity of the currency and sometimes the size of the trade. Finally, if the customer has access to currency and wants to wire in an amount to open a WorldCurrency CD there are no conversion charges incurred at all. They can also request that the proceeds be wired out in currency at maturity.
  • Question: Are these WorldCurrency CDs available in IRAs? What other types of accounts are available for these CDs?

    Response: There are a myriad of account types that are available including IRA's. We have personal, trust, corporate, IRA, retirement plans, investment advisor, and many more.
  • Question: For the normal individual investor, in general, how would gains due to currency appreciation in these WorldCurrency CDs be considered on one's Federal taxes if held in a non-IRA type of account?

    Response: EverBank issues a 1099INT for interest paid each year; this is equal to the foreign interest paid converted to US dollars on the date of payment. EverBank does not provide tax advice but many our customers tell us that they use the purchase price plus all interest declared through time as their cost basis (like a dividend reinvestment program) and compare that to proceeds to determine gain or loss.
  • Question: I see EverBank also has Marketsafe CDs that provide 100% deposited principal protection if the account is held to maturity. Are currency prices too volatile to offer the same type of protection for the WorldCurrency CDs?

    Response: We have considered a series of principal protected WorldCurrency CD's and may well do so at some point. For longer term issues the math can work.
  • Question: An investor interested in this World Currenty CD or any of EverBank products, can open an account online, correct? Some of my readers have been concerned about filling out the application online with an initial password and then having to print and mail in the application. They felt it would have been more secure if it could have been accepted online. In general, what steps have been done or are planned to ensure account security?

    Response: From the perspective of the site we maintain a secure environment; but I do understand their angst about the US Mail. We have many enhancements scheduled for our account application process that will be rolling out progressively over the next several quarters. I think you and your readers will be very pleased with all the changes being made including a more one step process.

My thanks to Frank Trotter for his detailed replies to all of my questions.

EverBank is FDIC insured (FDIC Certificate # 34775). Please note, FDIC insurance covers against loss due to the failure of the institution, but not market related fluctuations, including changes in currency prices.

Related Pages: CD rates, EverBank

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Comment #1 by Anonymous posted on
I have used Everbank for several years now:

Positives: Relatively painless acces to foreign currencies for the small investors. When interest rates were 1-2%; there were several currencies paying 3,6, and even 10%. Fairly low entry - 10,000 for single currency CD or 20,000 for multi currency CD.

Negatives: Unlike other investments I make, there is no listing on their site of what my gains/losses were for various perios (1,3,5 years, etc.). This is somewhat difficult to calculate on my own.

Their are other options, such as foreign denominated, unhedged mutual funds.

Still, I consider this a good diversifier. My returns for the lat 4 years have been better than domestic CD's, but not nearly as good as the market. Obviously, currency CD's have risk, but probably much less than stock market risk.

Comment #2 by Anonymous posted on
I wonder how the merger with NetBank is coming along. There has been no news on this for two months.

Comment #3 by Banking Guy (anonymous) posted on
Banking Guy
Anonymous 1, thanks for sharing your experience with EverBank and these Currency CDs.

About NetBank, I'm afraid I forgot to ask about the progress of NetBank's integration into EverBank. They do seem behind on this process.

Comment #4 by Anonymous posted on
Thanks again for sharing this interview. I can't help but wonder if long term callables might be a good alternative. The 20 year, with non- callable period of 1-2 years (interest paid monthly) is averaging 6.50%. As always these are FDIC insured and allow POD/TOD specification.
Have a great day all.

Comment #5 by Anonymous posted on
Callable CD's IMHO are the worst of both worlds. If interest rates decline, they will be called and you will have to reinvest at lower rates. On the other hand, if inflation picks up and interest rates shoot up, you could be stuck with these for 10-20 years at a rate 1,3, or even 5% points lower than new rates.
While they are tempting for the 2 or so years they are not callable, you are only get 1% or so above rates currently available.
I would invest REAL caution when dealing with long term callable bonds.
It is GREAT, for the issuer. I wish I could get a CD that I could call if rates go up, but hold for 20 years should rates go down.

Comment #6 by Anonymous posted on
I wonder if anyone know how to receive a cash in a foreign currency. EverBank may issue a check in a certain currency type, but they won't cash it.

Comment #7 by Anonymous posted on
vqjWell you should have a nice balance of short ,intermediate and long term investments. I just went long,2027, on a 6.5% CD callable after one year every 6 mths.

Also you can always sell at market value. I still have alot of tax free bonds AAA paying 5.75% and some Ford bonds that lost value but pay 7.25%.

Caution: on Cd sale value dependent on Bank strength/rating as well as prevailing rates

Comment #8 by puckwins (anonymous) posted on
I'm a trader and investor in currencies. Why must I give 1 week notice when my currency cd is expiring? hmmmmmm

Comment #9 by Anonymous posted on
Keydirect's rates went down.

6mths 4.25
7-17 mths 3.75
18-23 mths 4.00
24-29 mths 4.15
30-47 mths 4.35
48-59 mths 4.00
5-6 yrs 4.35
7-9 yrs 5.15 (was 5.5)
10 yrs 5.50 (was 5.7)

+ .05 % for 50k
Different areas may vary.

Comment #10 by Anonymous posted on
Rob of NYC
I posted early last summer about Everbank - since then I have transferred most of my currency investments to Rydex funds
Pros: they charge about .40%; interest rates are much higher than Everank (judging from what is posted and what I have received)
It is easy to see how well my investment is doing both in $ & %.
One other positive; Everbank pays next to nothing in interest for short term investments (less than 3 months). With an ETF you get the same interest as long term holders, whether one day or 5 years.

Cons: Not FDIC insured. As long as it is a EFT and NOT an ETN; you are pretty safe, not against currency lost, but against fraud. You must pay a commission upon purchase or sale (though with some discounters is goes down to $5 or $10 per purchase/sale).

I still keep Everbank for currencies that I can not find in ETF's.

Comment #11 by Anonymous posted on
I have almost $200,000 in Everbank.
The Everbank Website says nothing about Grace Periods. I called five days after my Foreign Currency CD matured, and John Koppish refused to redeem it without charging me a ridiculous 1.5% penalty. He gave me mumbo-jumbo about how the CD was already converted at maturity. Everbank does not actually trade the foreign currency at maturity, they simply roll it over. As such, this information is a lie. Everbank is extorting money through its fees.

Comment #13 by Anonymous posted on
I you lost money in an Everbank World Currency CD, please contact Attorney Mike Millen at

Comment #17 by Anonymous posted on
I felt the fees and service was poor, but the global yields were better than in the US until I visited They gave the same interest rates in money markets that Everbank does in cd’s. The bonds yields are about twice as high, and above all they are flexible to work with.