Banks offer attractive rates for CDs

Sacombank on April 16 introduced a CD product with an interest rate of 8.6% per year. The product has a minimum face value of VND1 million and a tenor of 84 months. The bank allows buyers to transfer or mortgage the CD as collateral for loans.

Earlier, Saigon-Hanoi Commercial Bank issued VND10 trillion worth of CDs with a face value of VND1 million and tenors of 18 months, 24 months and 36 months. The bank offers interest rates of 8.2% to 8.8% per year, while CDs worth VND2 billion upward are subject to an interest rate of 8.9% per year.

Early this year, SeABank introduced a CD with interest rates from 8.4% to 8.6% per year for tenors from 24 months to 36 months, 1.2 to 1.5 percentage points higher than the usual deposit rates for the same terms.

Bui Quang Tin, a lecturer with the Banking University of HCMC, said banks are racing to mobilize capital for medium to long-term credit, so they offer high rates for CDs to attract buyers quickly.

Further, CDs can help banks secure stable capital sources as regular depositors are able to withdraw money before maturity. However, customers holding a CD cannot withdraw the money before the due date but can mortgage the CD for a bank loan.

Many banks are in dire need of long-term capital. As requested by the State Bank of Vietnam, banks must reduce their short-term funds for medium- and long-term loans to 40% from early this year against last year’s ratio of 45%.