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RMB Special CD Rates at Bank of China, New York Branch

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Bank of China

Bank of China in New York is offering a CD promotion with very competitive short-term CD rates. However, there's a catch. The CDs are denominated in the Chinese currency which is called Renminbi (RMB). You can see the details of this promotion in this Bank of China promotions page. The promotion is scheduled to last until 6/29/2012. The CD rates are as follows:

  • 2.50% APY 1-year RMB CD
  • 2.00% APY 9-month RMB CD
  • 1.60% APY 6-month RMB CD
  • 1.20% APY 3-month RMB CD

Minimum deposit is $10,000. According to the bank, these deposits are FDIC insured (for under $250,000). However, deposits do have exchange rate risk. According to the bank:

Investment Risk: Due to the nature and volatility of the foreign exchange market, if the value of your foreign currency deposit moves adversely against the U.S. dollar, you may lose money, including principal. The past investment performance is not a guarantee of future investment results.

Credit for this find goes to DepositAccounts.com reader Bounty2012 who reported on this promotion in this DA forum thread. He reported that he opened one of these CDs last year after the Wall Street Journal published the article, Five Reasons to Open a Chinese Bank Account. Last year I reviewed this article and listed a couple of other banks that offer foreign currency CDs

Here are some additional useful details mentioned by DA reader Bounty2012 in the forum thread:

It is almost the same as a regular US Dollar CD, the only difference is you need to open RMB-denominated account with Bank of China and then open the RMB CD.

They have 2 branches in New York City. If you live nearby, visit their branch for details. If you live out of New York, call them to get more information. They do open accounts for out-of-states customers by mail.

One of the bank's New York City branch is on 410 Madison Ave., and the phone number is (212) 935-3101. The other one is the Chinatown Branch at 42 East Broadway. That phone number is (212) 925-2355.

Bank of China's New York branches are listed in the FDIC database (FDIC Certificate # 33652 and FDIC Certificate # 33653). Even though they have two separate FDIC charters, the FDIC warns:

Bank of China, New York, NY (FDIC Cert# 33652) and Bank of China, New York, NY (FDIC Cert# 33653) are branches of the same banking institution. Therefore, deposits held in these two branches do NOT receive separate FDIC insurance coverage. Deposits held in the same capacity at each office would be added together prior to applying the insurance limit for that ownership type.

Bank of China also has a Los Angeles branch. However, the bank warns that this branch is not FDIC insured:

How These CD Rates Compare

These special RMB CD rates are over twice as high as the best standard dollar-based CD rates. For example, the best 1-year CD rate that's nationally available is 1.15% APY at Doral Bank Direct. If you want a 2.50% APY on a standard CD, you'll need a term of at least 7 years. Both PenFed and Patelco Credit Union offer 7-year CDs with a 2.50% APY. These rates are accurate as of 5/31/2012.

One internet bank does offer foreign currency CDs. That's EverBank which has long offered foreign currency CDs. I first reviewed them in 2007. However, they currently don't offer Chinese RMB CDs. EverBank's highest WorldCurrency CD rate is 4.00% on the 3-month and 6-month Brazilian real CD (as of 5/31/2012).


  Tags: Bank of China, CD rates, New York

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Comments
4 Comments.
Comment #1 by lou posted on
lou
Actually, there is another important catch to this deal. In Ken's review of this bank and the Wall Street article from last year, he linked to a fatwallet thread discussion about these CD's. Posters reported they had found that there is a sell and buy rate for the RMB currency on any given day. Apparently, there is a 1.5% spread, meaning that without any change in currency's exchange rate there would be a 1.5% charge to convert back to US dollars, thereby losing 1.5% of the 2.5% interest rate. So, in reality, your rate for the 1 year CD is actually 1%. This bank's fee for processing the exchange is greater than other banks. The RMB would have to apreciate by at least 1.5% over the course of the year while owning the CD to obtain this 2.5% rate. I was at first interested in this deal, but I think this aspect of it is a deal killer.

9
Comment #3 by Bounty2012 posted on
Bounty2012
Please let it weaken more so I can buy it cheap.  Smart ones bought them when they were like 1:8.0, now it is like 1:6.3 , please go back down to 1:8.0 era and let me get on ride as well.  

1
Comment #4 by Anonymous posted on
Anonymous
To lou - #1,

You are correct in your observation, however you are discounting that China manipulates the Renminbi and will never pay any interest rates at a loss. They will depreciate their currency bellow the interest rate and will never pay any real interest on your investment. The fluctuation in the exchange rates is not insured by FDIC, you may loose big chunk of your money.

2