Certificate of deposit

A savings bond is one of a credit institution offered fixed income investment product. His interest rate is fixed for the entire term and therefore manageable in advance. In contrast to exchange- oriented bonds these papers are free of charge and eligible as collateral usually 100%. The term scale ranges up to ten years. Overall, the range of savings bonds is very diverse and tailored to the diverse needs:

• The normal savings bond is purchased at full face value. The interest shall be paid at the end and are freely available.
• The discounted savings bond interest and compound interest for the entire term shall be counted from the beginning to the purchase price so that the purchase price is well below the nominal value.
• The savings bond with increasing annual interest rate is usually available at short notice conditioning, similar to the federal government note. It can be redeemed at par plus accrued interest, after a short waiting period at any time.

In Switzerland -term notes are used for an analog product of the term.

Savings bank letter

A savings bank letter is a savings bond that is issued by savings banks.

Savings bonds can not be traded on the stock market, as there are registered bonds. Moreover, in contrast to bank bonds since January 1, 2011 to investor protection up to € 100,000 subject in all EU countries. In addition, the issuing credit institutions can connect a deposit guarantee fund.

Subordination agreement

There are various banks now savings bonds issued with a so-called subordination. This means that in such a savings bond deposit insurance in the case of bankruptcy of the credit institution does not apply. Because the event of insolvency of the Bank until all other creditors are given priority. This may mean that one gets nothing in return as a savings bond owner of the money.

History

The savings bond is an invention of Vereinsbank Wiesbaden (now Wiesbaden Volksbank ) and was first issued on 15 April 1964. First, the People's banks benefited from this innovation. As of 1967, the savings banks imitated the product and placed it as a savings bank letter on the market. Later it used a well private banks.