As we’ve discussed in recent weeks, April is one of the biggest months for CD renewals. Despite low rates, untold amounts of money will roll back into CDs. This means lower spending power for those who rely on CDs for savings vehicles. So why are so many consumers willing to renew rather than replace?
Reasons for Renewal
Simply put, it’s convenient to let a CD roll over when it matures. Renewal requires no action from the consumer. While current interest rates and common sense suggest that an alternative product would better suit their needs, many opt to let their money automatically roll over into a new CD. Easy, but probably not ideal.
CDs also provide safety. For those who prefer a low-to-no-risk place to hold their funds, CDs might be the way to go. It’s difficult to lose money on a CD, and that peace of mind can be valuable. Especially when you consider how rocky the market has been lately.
As low as rates are, CDs are still offering better returns than a savings account. This is also appealing to risk-averse savers who want a safe harbor for their money.
All of that said, interest rates have been at all-time lows for the last two years. Anyone still holding their retirement funds in a CD is missing out on alternative vehicles that are likely to perform much better.
The Replacement Conversation
Last week’s Marketing Corner listed several reasons for finding alternatives to Certificates of Deposit. Given that this is CD Replacement Month, you’re probably already having this conversation with clients and prospects. If not, there’s still time to get your hands on the resources that can help drive the discussion.
The IAMS 2022 CD Replacement Kit is a must-have for producers during this time of year. It includes:
- Taxable Equivalent Yield Chart
- CD vs. Annuity Comparison Chart
- Split-Annuity Comparison Chart
- CD vs. FIA Sales Strategy
- CD Prospecting Letter
- Customizable Fact Finder
- Retirement Pitfalls Presentation
- Going Broke Safely Presentation
- IAMS Top Annuity Solutions Report
