NEW Bank CD question..

Castro156

Member
Oct 9, 2011
37
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NEW YORK
Hey everyone, hope all is well in Forum-land.

I just have quick question about Bank Certificates, I know this topic has been covered before on the forums and I did a search and found some helpful info.. Yet still I have a question/s...

There was a term used by "old school" Dominican conservative investors; "Plazo fijo y de eso vivo" in terms of bank CD's.. Back in the day this was common practice, one would have a few million pesos, get 16% interest and basically live off of the $60, to $70,000 pesos a month while maintaining their nest egg in tact without any tricky investments.. Seemed like a sure way to live without risks involved.. Even with all the Bank situations ie BANITER etc etc. I still never heard of anyone who personally lost all their money or that a MAJOR Dominican bank like BHD, BANCO LEON OR BANCO DE RESERVAS flat out not pay out a CD if and when a customer decided to cash out.

My questions are..

1 - is this still common practice in DR? "Plazo fijo y de eso vivo"
2- What MAJOR banks are paying the highest interest for long term CD's (24-36 MONTHS)??
3- is the profit taxed these days like in the US?
4- What are the pros and cons of this type of investing in Dominican banks..

All feedback , answers and observations are greatly appreciated.

milz~:classic:
 

AlterEgo

Administrator
Staff member
Jan 9, 2009
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I have a friend who retired to SD when she was in her early 50s, with $50,000/US. She literally lived off the interest she got from Dominican CDs for years, and just about the time that interest rates plummeted she turned 62 and started collecting Social Security.

Ah, the good old days of high interest rates....

AE
 

Castro156

Member
Oct 9, 2011
37
6
8
NEW YORK
Thanks for your responses.. First off, sorry
For those people you know that lost it all.
Thats a sad sittuation..

I agree that $50k US is not enough to
Retire ANYWHERE.. I guess it also depends on your life style

I consider that if the average Dominican is making less than
$10K pesos a month, retaining $50K to $70K pesos a month
Is a pretty decent living in DR.. Well unless
You're out every night esating out and drinking
Again.. Depneds on your lifestyle.
 

bayaguanaman

New member
Oct 22, 2009
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Hi JD Jones

Are the main banks issuing the Central Bank CD's. I noted recently that Banco Popular are issuing them but at 12% and interest paid twice annual.
 

santo1

Member
May 1, 2011
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Banco Central CD's are going for 15% per year for 5 years at the moment.[/QUOTE]

I thought the central bank stopped the issue of all new CDs in sept 2009 ?
 

santo1

Member
May 1, 2011
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The Central Bank stopped the direct issue of bonds to private citizens.

To purchase a Central Bank CD now, you have to go through a bank.

Ok thanks,my last cd through bhd was 8% for 1 year back in april,the 12% stated now seems a big jump,how long is this for ?have i missed something ?
 

Syork

New member
Sep 5, 2004
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You have to talk to the people at the BHD bank and set up an account with the their BHD Valores- allows you to purchase peso CD?s from the Banco Central-15% right now. Minumum of $100,000 RD. You can also purchase dollar bonds when they come up for sale via the Bolsa de Valores(Stock Market) here in the DR. I have been very pleased with their service so far.
 

santo1

Member
May 1, 2011
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Thanks,but what duration is the cd at 15% ? are these recent ? as bhd sell there own cds and there never as high a the centrl banks ones in the past.
 

Castro156

Member
Oct 9, 2011
37
6
8
NEW YORK
Thanks for this info!!

But does it actually work? I mean who issues you the CD? Bhd or Central?
Also does BHD charge for this service? Imean if they are providing thier own CD's
For 8% why would the give you 15% for this out sourced CD?

This is getting very interesting!

Thanks..
 

santo1

Member
May 1, 2011
32
0
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Thanks for this info!!

But does it actually work? I mean who issues you the CD? Bhd or Central?
Also does BHD charge for this service? Imean if they are providing thier own CD's
For 8% why would the give you 15% for this out sourced CD?

This is getting very interesting!

Thanks..
Good question,it must have changed,as in the past bhd/ban reservas/popular were always alot lower rates than central bank.Also theres no charge at bhd,however you must leave your money in for the time agreed,3 mes,6 mes,12 mes or you pay a penalty % and its alot.I think tambo is clued up on this if shes lurking ?
 

Syork

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Sep 5, 2004
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Yes, it works. The CD?s are from the Banco Central but are now distributed(marketed) through the banks. BHD is the bank use but I am not sure what other banks offer this service. I believe that the Banco Central offers the certificates at 16% but the BHD is paying 15%. Good for 7 years. Interest is payed twice a year to your saving account. As far as I know, not taxable here but the interest earned is taxable in the US as unearned foreign income. If you need to cash out a CD before it is due, the BHD Valores can market it for you, according to the information we received, without penalty. Not 100% sure about that but have not had to do that :) Much easier than going through the old system of going to the Banco Central and waiting to buy a CD. BHD Valores sends you a confirmation email and also sends you a statement of your holdings every 6 months. So far, so good!
 

AlterEgo

Administrator
Staff member
Jan 9, 2009
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Syork, that 'going to Banco Central and standing on line outside and inside forever' was ridiculous. Starting with finding a place to park at 5 a.m. We did it several times. Once they cut off the # allowed with the person in line in front of us, after we'd been there for hours. My husband's brother used to head their international money exchange department, and after that day we used to give him the $$ to open the CDs.

Sounds like this new system is MUCH easier. So, some things DO get better there!!!

AE
 

santo1

Member
May 1, 2011
32
0
6
Yes, it works. The CD?s are from the Banco Central but are now distributed(marketed) through the banks. BHD is the bank use but I am not sure what other banks offer this service. I believe that the Banco Central offers the certificates at 16% but the BHD is paying 15%. Good for 7 years. Interest is payed twice a year to your saving account. As far as I know, not taxable here but the interest earned is taxable in the US as unearned foreign income. If you need to cash out a CD before it is due, the BHD Valores can market it for you, according to the information we received, without penalty. Not 100% sure about that but have not had to do that :) Much easier than going through the old system of going to the Banco Central and waiting to buy a CD. BHD Valores sends you a confirmation email and also sends you a statement of your holdings every 6 months. So far, so good!

CERTIFICADOS DE INVERSION ESPECIAL

Tasa de Inter?s de
Cup?n

7

2,527 RD$ 4,000.0 DOBCCI15.50%130718 15.50%

Fecha de
Venc.
D?as al
Vencimiento
Valor Nominal
RD$
Precio de Cotizaci?n
Ponderado
Valor Nominal
RD$
Precio de
Corte
Precio de
Cotizaci?n
Ponderado
Tasa de
Rendimiento
Promedio
Ponderado
plazo 7 a?os
Precio de
Rechazo Prom.
Pond.
13/07/2018 2,527


3,625,070,000 87.7420% 3 ,625,070,000 87.7420% 87.7420% 18.7500
 

santo1

Member
May 1, 2011
32
0
6
Santo, it might be better if you just post the link

AE

Yes something went wrong,any way just log on central banks website,and look for CERTIFICADOS DE INVERSION ESPECIAL ESPECIAL; all the info is there,im just waiting to hear from my agent in bhd to see if they are selling on behalf of the central bank at 15%,central banks rate at 15.5%,so bhd take 0.5% if true.
 

Castro156

Member
Oct 9, 2011
37
6
8
NEW YORK
Thanks for the info Santo.. Please let us know the feedback from your agent, Im also contacting both banks for answers and will post what ever I find out.. 15% is pretty sweet especially coming from BHD.. I have dealt with them for years and have only had very good service on a regular basis. I actually feel kinda safe working with them on something like this.

milz.
 

santo1

Member
May 1, 2011
32
0
6
Hi,yes all true ! bhd valores a seperate part of the bhd bank.15% with bhdvalores for 7 years /bhd normal 9% for 1 year & 10% for 2 years.just remember the devaluation rd to the dollar is running at about 2.7% per year at the moment ! and leading up to the election might get worst if pape hipo starts leading the polls with a large margin.The lock in could be a bad move,as i see 20% next year,all these rates are great if you plan on being here for the pesos,if your looking at a quick fix taking dollars back home forget it,I would like to know if any other banks are selling the central banks CDs ???