INVESTORS GET HELP IN SHOPPING FOR CERTIFICATES OF DEPOSIT

 Handy Checklist Available From Ohio Division of Securities

While the volatile stock market can make certificates of deposit appealing to investors, some CDs aren't what they seem.  That's the message behind a handy checklist now available from the Ohio Department of Commerce’s Division of Securities.

With many elderly investors complaining they've been misled into buying "callable" CDs with 10- to 30 -year maturities, Ohio securities regulators hope investors will use the checklist to avoid getting stuck with something they don't want.

"Not all CDs are created equal, so investors need to ask questions and understand exactly what they're buying," cautioned Ohio Securities Commissioner Debbie Dye Joyce.  "Callable CDs often have higher yields than traditional bank-issued CDs because they require a 10-, 20- or even 30-year commitment.  Investors should be careful and ask the questions on the checklist to make sure they know what they're getting into and whether it meets their investment objectives," she said.

According to Dye Joyce, many investors don't realize that with callable CDs only the issuer, not the investor, can "call" or redeem the CD.  Investors who want their money before a callable CD matures risk a substantial loss -- as high as 30 percent.

Callable CDs are being marketed via newspaper ads, high-pressure telephone solicitations and direct mail.  In many print ads, the CD's interest rate is trumpeted in large print while its maturity date is buried in small type and technical jargon.

While no enforcement action has been taken yet involving “callable” CDs, the Division is concerned that these investments are being offered to Ohioans who might not fully understand the investments. 

Designed to help alleviate confusion, the fill-in-the-blank checklist consists of 13 questions to help investors distinguish between traditional bank-issued CDs and callable CDs.  Before purchasing any CD, the checklist prompts investors to learn:

• its maturity date
• where the money will be deposited
• the penalties for early withdrawal
• any costs associated with selling before maturity
• whether the interest rate is fixed or variable

Ohioans can request the free Callable CD Checklist and other investor education materials by calling the Division of Securities Investor Protection Hotline at 800-788-1194.  The checklist and other materials can be downloaded from the division’s web site at http://www.securities.state.oh.us/

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