Dedicated to Deposits: Deals, Data, and Discussion

Review of Sovereign Bank's Save & Invest CD Package


Santander Bank, N.A
Sovereign Bank is offering a unique equity index CD package called the Save & Invest CD Package. It combines a standard 6-month CD (the Save CD) that has a very competitive 2.25% APY and a 3-year equity index CD (the Invest CD). You are required to invest an equal amount in both CDs. The Invest CD is based in the S&P Index. If the S&P Index is higher one, two and three years from 11/30/09, you'll earn 3% for each of those years. So the most you can earn is 3% for each of the three years. However, if the S&P Index is lower on any of those anniversary dates compared to 11/30/09, you won't receive any interest for that year. More details about this CD package are described at Sovereign Bank's Save & Invest CD Package page.

Some additional details from Sovereign's website and from a CSR include:
  • Minimum deposit is $2,500 in 6-month Save CD and $2,500 in 3-year Invest CD (web)
  • Maximum deposit is $499,999 (web)
  • Must be opened on or before November 27, 2009 (web)
  • 100% of your principal is guaranteed in the 3-year Invest CD if there is no early withdrawal (web)
  • Early withdrawal penalty for the 3-year Invest CD equals 9% of principal for withdrawals in year one, 6% in year two and 3% in year 3 (CSR)
  • Not available in IRAs (CSR)
  • 2.25% is earned on the 3-year CD until November 30, 2009 (CSR)
  • Branch visit is required (CSR)
Is It a Good Deal?

It's interesting to note that they don't list the 3% on their website. I had to call Sovereign Bank (877-768-2265) for the rate. Since you can get 3% on regular 3-year CDs at other banks, the 3% rate hurts this CD package. The 6-month CD rate is nice, but it won't make up for one bad stock market year. In that case, you'll only receive 3% for 2 out of the 3 years and 0% for the bad stock market year. Instead of a 3% 3-year CD, it'll be effectively a 2% 3-year CD.

Branches are located in the Northeast in the states of Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania and Rhode Island. The bank is a FDIC member (Certificate # 29950).

Thanks to the readers who commented on this CD package.

$100 Checking/Savings Account Bonus

Sovereign Bank still has a $100 checking/savings account promotion, but it's scheduled to end on 10/31/09. Refer to my post for more details.

Other Equity Index CDs and Regular CDs

Compass Bank has offered similar Equity Index CDs a few times this year. The last one was in September. In this March post I described how you can build your own stock market CD. Whether you build your own stock market CD or just want regular CDs, a higher CD rate always helps. Refer to the following pages to find the best rates:

Related Pages: Massachusetts, New York, New Hampshire, Santander Bank, N.A, Pennsylvania, Maryland, CD rates, Rhode Island, New Jersey, Connecticut

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Comment #1 by Ari Weinberg (anonymous) posted on
Ari Weinberg
Yes, there are several ways to replicate the payout. A long-term CD and an in-the-money call. The catch with these structured products tend to be that you are paying a lot for "the structure" and not getting a lot of the returns.

Comment #2 by Anonymous posted on
Sovereign Bank has many fees and makes money from us.
Overdraft, non-activity, negative balance daily fee is $5(yes, it's daily)