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Research into AARP Financial Savings Center

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Update 6/14/08: The savings account and Jumbo MMA yields have fallen to 3.50% APY.
Update 5/24/08: The savings account and Jumbo MMA yields have fallen to 4.05% APY.

The good news is that AARP Financial Savings Center continues to offer a 4.75% APY Jumbo money market account and a 4.50% APY no-minimum savings account. It has been almost three weeks since my first post on these accounts. During this time many readers have expressed concerns about this banking center and the whether these high rates are just teasers.

I haven't done too much of my own investigations since my last post, but I'll try to highlight some of the research that several readers have done. The main concern is that AARP Finacial Savings Center is not a bank. Here is how it's described at the terms and conditions page:
AARP Financial Inc. makes available the AARP Financial Savings Center brought to you by Waterfield Financial Services Inc. AARP and AARP Financial Inc. receive fees from Waterfield Financial Services Inc. for AARP's license of its intellectual property and AARP Financial Inc.'s oversight of the AARP Financial Savings Center. All Checking and Money Market Savings deposit products available through the Savings Center are offered by and will be opened and processed through The Huntington National Bank.

I did receive the following statement from Huntington Bank: "We do have AARP savings/money market accounts." So there appears to be no false information in these terms and conditions. However, there are still the legitimate questions about who is responsible for what. This was explained well by a commenter, Dianne, who shared some of her research and concerns:
They are all internet "BANKING CENTERS", i.e. not banks and I really don't understand what their legal status is. Until today I was not aware that UFBdirect.com (which is listed in bankrate.com) was not a bank but one of these "banking centers". Moreover, they all utilize Waterfield Financial or Affinity Financial. Here is what I could find about these companies: Waterfield Mortgage Co (which was founded by the grandfather of the guys who started Affinity Financial Corp - affinityfc.com) owned Union Federal Bank which had UFBdirect.com. Waterfield Mortgage (and hence UFBdirect.com) was acquired by Sky Financial in 2006. Sky merged with Huntington Bankshares (HBNC) in 2007. And, Affinity Financial is a Waterfield Family Company, as is Waterfield Financial Services and Waterfield Enterprises. And lo and behold nationalinterbank.com is itself a Waterfield Enterprises company. So, until I can speak to some knowledgeable bankers or such I am leaving my money in a Corus 4% money market account. As one of the comments suggested there are too many entities involved here to know who is responsible or liable for what.

I can't provide any more insights into who has the responsibility of ensuring the safety of the deposits, but one thing to note is that this AARP Financial Savings Center is managed by essentially the same company and in the same way as UFB Direct, which has a fairly long history and many satisfied customers. In fact, it turns out that there are many similar banking centers that offer these high yield online accounts.

One of the readers compiled the following list of Waterfield related banking centers and the highest rate you can get as of 5/20/08.
  • teamsterbankingcenter.com (3.50% APY)
  • www.nationalinterbank.com (2.70% APY)
  • www.ufbdirect.com (3.00% APY)
  • www.afibankingcenter.com (3.25% APY)
  • www.afsabankingcenter.com (3.00% APY)
  • www.amabankingcenter.com (3.25% APY)
  • www.boatbankingcenter.com (3.00% APY)
  • www.caattorneybankingcenter.com (2.75% APY)
  • www.iaff-fcbankingcenter.com (3.75% APY)
  • www.jnetbankingcenter.com (3.00% APY)
  • www.lualumnibankingcenter.com (3.00% APY)
  • www.nrabankingcenter.com (3.00% APY)
  • www.nualumnibankingcenter.com (3.00% APY)
  • www.nursesbankingcenter.com (2.75% APY)
  • www.nwfbankingcenter.com (3.25% APY)
  • www.realestatebankingcenter.com (2.75% APY)
  • www.texasvfwbankingcenter.com (3.00% APY)
  • www.veteransbankingcenter.com (3.25% APY)
  • www.vtalumnibankingcenter.com (3.25% APY)
  • www.nafebankingcenter.com (3.25% APY)
  • www.afabankingcenter.com (2.75% APY)

This brings me to the other concern that many have expressed. Why is AARP Financial Savings Center offering such a high yield? As you can see above, all the other rates are much lower. One thing to note is that UFB Direct did offer a very high yield on its Absolute Savings account for much of last year. Relative to accounts from other banks, it wasn't as high as the current AARP rate, but it was still higher than the rate of the savings account offered directly by Huntington. So it seems like certain banking centers have leeway in determining the rates. I'm not sure who pays for the higher rates or their profit strategies.

UFB Direct's Absolute Savings Account yield was at 5.31% APY for much of last year which was near the top for online savings accounts. It was slow to fall, but it did fall, and now it's only 3.01% APY which is in the middle-of-the-pact for online savings accounts. So I think it's likely that we'll see the AARP rate fall to be similar to average online savings account rates. Hopefully, the fall will be slow.

For more details about AARP Financial Savings Centers and the the savings and money market accounts, please refer to the following past posts:

Thanks to all the readers who shared their experiences and research.
  Tags: savings account

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Comments
36 comments.
Comment #1 by Michael (anonymous) posted on
Michael
Thank you, Bank Guy, for your detailed updated posting on AARP Savings.

It is nice to know you read all the posts to your blog.

I agree that there is no doubt that eventually the AARP Jumbo MMA rate will drop to equal all the other rates Waterfield/Affinity is offering.

After it happens, I (and I'm sure many others) will transfer our money out to a bank that has similar or higher rates, but more importantly a bank that does not have a "middleman" management company. It is only worth dealing with a "middleman" if the rates justify the extra concern, in my opinion.

If one does eventually transfer out, remember to keep that small minimum in the account for that 180 days to avoid the early account closing fee.

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Comment #2 by Anonymous posted on
Anonymous
Banking Guy, thank you so much for the follow-up.
I have deposited 2 large sums of money with AARP and also added several POD's names to the account for more FDIC insurance. I haven't received the free checks from Huntington Bank yet, and I will have more confidence when the checks are here.
There has been a lot of research on AARP Financial Center (on your blog), which makes me happy and stress free about the legitability of the company.

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Comment #3 by Connie (anonymous) posted on
Connie
Incidentally. "legitability" is not a word. I think you meant "legitimacy of the company."

The 4.75% APY is absolutely a teaser rate. Obviously, the question is "How long will the teaser rate last?"

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Comment #4 by Chester (anonymous) posted on
Chester
Reposted Here Since This Is The Latest Thread About AARP Savings:

I requested that my Jumbo MMA money never be transferred out of The Huntington Bank to any other bank.

I received a confirmation note that my request was accepted.

I can't think of any downside to me making this request.

By making this request, I know exactly which bank my money is in, that that bank is FDIC insured, that the bank is relatively solid, and that I don't have to worry about not knowing my FDIC coverage balance, etc.

If anyone can think of a downside to me making my request, please post it.

I'm thinking as long as the interest rate stays high, why not just keep my money in The Huntington Bank?

Of course, the rate will not stay high, so all this is probably irrelevant anyway.

Once the AARP Savings rate drops, I wonder if Waterfield and/or Affinity will create a high teaser rate account via another organization, and if they do, will it take another long time for us to find out? (Remember, this AARP account has been around for quite a few months, but we didn't find out about it until 3 weeks ago.)

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Comment #5 by Anonymous posted on
Anonymous
Repost from 5/21:

I have performed the same (requested that Huntington Bank be the ONLY source to hold my funds);received email confirmation stating that I have "opted" out of Countrywide. I also made certain that POD was titled after my name--under account title. Saved all email transmissions in hard copy form.

I too had many questions, but feel much better that my money is secure and I have access via ACH from another bank (although it takes 3 days to process from "the other bank"--why?). Received the ATM cards from a PO box in Indiana and also pin number a day latter. Waiting for checks to come.

Apparently, the 4.75% is a teaser rate and hoping it last a least a few months.

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Comment #6 by Anonymous posted on
Anonymous
My request that my accounts not be held at Countrywide was granted in a bankmail stating "you have opted out of the deposit program and your FDIC insurance will remain with Huntington National Bank."

I requested ACH push from GMAC & CWB on the 19th. ACH from GMAC was posted 5/19 at GMAC and 5/21 at AARP. ACH from CWB was posted 5/21 at both CWB & AARP. I appreciate not having to wait until the following day to confirm the date the incoming ACH was posted.

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Comment #7 by Anonymous posted on
Anonymous
hello all, I have also recently opened a jumbo secure money market account with AARP Financual Savings Ctr and share some of the same concerns that have posted here. Many here have stated that they will feel better about their accounts once they receive their checks, so that they will then be able to have access to their money by writing a check against their accounts. Many of the same people have also expressed that they will be closely watching AARP Fin Sav Ctr/Huntington bank/Waterfield financial etc for any red flags, and if any show up, they will essentially close their accounts and get their money out by writing a check. What I'm wondering is why these same concerned people wouldn't just do an outgoing bank wire transfer since it the fastest way to transfer money from one financial institutiion to another. If a wire transfer is done before noon most financial institutions quarentee it will be completed the same day, where a check can take several days to clear. Just my thoughts. Any comments?

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Comment #8 by Aditya Mishra (anonymous) posted on
Aditya Mishra
One obvious clue to why AARP offers higher rates is that they a very attractive target for insurance and financial company. You cannot join AARP until you are 50 which filters out all the younger nimble fingered riffrafs. Retirees would most likely keep all their assets in one place of this very account and Affinity knows how much their nest egg is worth to a penny. This information is gold mine for AARP which gets hefty commission on any sales to the members. Somebody has already posted how many billions dollars of sales AARP garners.

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Comment #9 by Sofa King Frustrated (anonymous) posted on
Sofa King Frustrated
RE: Wire Transfer: How can you do a wire transfer before noon if you can't walk into their branch to do it? If they allow wire transfers by phone, no one has posted this.

To Aditya:

The 4.75% is a teaser rate, just like they did for other accounts from other named sites they provide. This rate will go way down as soon as they get enough deposits. Your theory about them liking AARP members to sell more stuff would not justify such a huge rate bonus.

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Comment #10 by Aditya Mishra (anonymous) posted on
Aditya Mishra
Sofa king;
It is not just my guess that psychology and attitudes change after retirement.
Teaser rates will not attract them.

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Comment #11 by Anonymous posted on
Anonymous
Wire transfer request can be done via fax the same day. There is a form for this in your online account.

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Comment #12 by Sofa King Frustrated (anonymous) posted on
Sofa King Frustrated
Aditya,

I am under 50, and I qualified for this account by becoming an Associate Member.

AARP Savings absolutely does not enforce does not enforce the age 50 and over rule. They are welcoming anyone to sign up, as long as you have some kind of AARP Membership (even if it is a partner and not a relative), and according to the CSRs, they know people under 50 are joining in droves.

Yes, psychology and attitude can come into play as far as people giving extra incentives to get customers, but in this particular instance, I don't think the scenario you wrote would justify this big of an interest bump. And proof is that Affinity & Waterfield has offered this kind of huge interest rate bump in the past to other bank account offers from people who were not AARP over 50 members. They took in big money in deposits and then reduced the rate once they had enough deposits.

Most retired people probably already have their insurances set, so really what kind of target are they? Sure, you will have some success selling them things, but I doubt the level of success that would justify paying 4.75% in today's market.

More than likely, since Waterfield is in the mortgage business, Waterfield wants big deposits and an influx of cash to help them stay strong financially, as the mortgage crisis has hurt them. Offering 4.75% gets them a huge influx of cash. It has nothing to do with people being retired and being able to sell them stuff.

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Comment #13 by Kimberly (anonymous) posted on
Kimberly
How much do they charge for the wire transfer via fax?

Do they guarantee if you fax them a wire transfer request in the morning that the wire will go out that day?

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Comment #14 by Anonymous posted on
Anonymous
Teamsters Banking Center rate is down to 3.25%.

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Comment #15 by Trevor Plantagenent (anonymous) posted on
Trevor Plantagenent
Thanks, Anonymous, for posting this. We all need to keep informed about all the Affinity/Waterfield managed accounts.

Yes, if you are a member of The International Brotherhood of Teamsters and you have a MMA with Teamster Banking Center, you will only get 3.25% APY. This is a whopping 1.5% difference than AARP's rate, which would equal $1,500 less interest on a $100,000 balance for the year.

Who's calling for a Teamsters' strike?

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Comment #16 by Anonymous posted on
Anonymous
Outgoing Wire transfers are initiated at the financial institution where the funds are being transferred from. AARP Financial Savings Ctr charges $20.00 for a wire transfer and you can initiate a wire transfer online by logging into your account. They guarentee the wire transfer will be completed the same day if done before 3:00PM.

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Comment #17 by Michael (anonymous) posted on
Michael
Kimberly, outbound wire transfers from AARP cost $20.

If you exceed 3 checks per month, they will charge you $10 per check (but they warn you that exceeding the 3-check limit can cause your MMA account to be pulled and perhaps changed to a regular checking account).

I have no idea if they guarantee your wires will go out same day.

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Comment #18 by Bozo (anonymous) posted on
Bozo
To: Some, not All
Re: Suggestions that old farts aren't nimble

I take a tad of umbrage with the thoughts expressed by some (certainly not all) that otherwise AARP-eligible folks (read: old farts) aren't nimble with their savings and thus logical targets for these accounts.

Gosh-a-mighty, what ELSE do we have to do with our time? I'm a heck more nimble now (well, at least with my money) than I was when I actually worked for a living.

And, no, I don't belong to AARP, although they've been sending me solicitations for ten years.

Yours,

Bozo

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Comment #19 by Aditya Mishra (anonymous) posted on
Aditya Mishra
to Bozo:
You are the exception that proves a rule and you just proved my point.
you may be nimble because you are not a member of AARP. I said so only about the vast majority of AARP members. I know a lot of seniors who cannot turn on a computer but spend all day watching TV or playing Bingo.

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Comment #20 by Lloyd (anonymous) posted on
Lloyd
Shame on you, Aditya, for harping on an old stereotype.

Today's seniors are not anything like the seniors of yesterday. Many people are living strong, active lives beyond 80 years old.

My dad just turned 80. With your stereotype, his doctor would no longer take x-rays of my dad. He would just hold my dad's body up to the light.

But my dad is strong. Plays both golf and tennis daily. He does not spend his days watching TV or playing bingo. He is very computer literate and tracks his investments online daily.

My mom and aunts and uncles are also very active seniors who are computer literate.

Shame on you, Aditya. Shame on your ignorance. You owe seniors an apology.

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Comment #21 by Anonymous posted on
Anonymous
Can anyone tell me if you can pull money out of the savings account if it is initiated from an external account? I read in the fatwallet forum that you can pull cash out from the MMA but not the HYS account?

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Comment #22 by Anonymous posted on
Anonymous
When I emailed AARP Financial Savings Center regarding ACH transfers to and from external banks, this is the reply I received from them:


"Thank you for contacting the AARP Financial Savings Center. We allow for incoming ACH transfers but do not initiate ourgoing ACH transfers. You can transfer funds between banking centers by utilizing our Money HQ service. Money HQ is an electronic, Internet based-service.

There are no monthly fees. The transactions fees will be applied as noted on our website.

Money HQ Service Fees:

• Each transfer made outside the Bank 2-3 day transfer. (Fee shall be deducted from your primary account at month) $2
• Next Day Transfer (Fee shall be deducted from the account you are transferring from at the time of the transfer)
$7.95

Inbound Daily; $5,000.00
Outbound Daily; $25,000.00
Monthly limit; 35,000.00"

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Comment #23 by Certificate of Deposit Rates (anonymous) posted on
Certificate of Deposit Rates
I noticed that some people posed the question about why such a high rate. I also noticed that some had made sure they opted out of Countrywide. Here is some information that may help answer the first and give you some concern for the second.

Huntington NB made a large purchase of Sky Bank. Year over year, they have grown from 7600 employees to about 10,900. Assets have grown from $35BB to $54BB. Income, although still in the black went from $423MM to $60MM. Current net income is 0.05% of Assets. Much lower than other banks. It also appears that they are somewhat struggling to maintain liquidity.

The FDIC estimates that about 33% of their deposits are uninsured (I guess people still haven't learned). BankRate.com gives them 3-stars which is average. A rating system that we use gives them a score of <20 out of 300.

Since it is a savings account, there isn't much interest rate risk. A savings account can change at anytime, so if for some reason deposits were sold off or something worse, you haven't really lost anything there. Just make sure you keep your deposits under $100K.

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Comment #24 by Trevor Plantagenent (anonymous) posted on
Trevor Plantagenent
Dear Certificate Of Deposit Rates:

Thanks for posting more info about Huntington.

One thing that bothered me is that you stated for people to keep less than $100,000. But what about the people who have qualified beneficiaries on their account? And their account title says "TheirName POD"?

Why can't they then have more than $100,000 to take advantage of the high rate for as long as possible?

Do you somehow doubt if one had qualified beneficiaries listed they would be ****ed in the end should Huntington fail?

Please clarify your posting.

Thank you.

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Comment #25 by Syzygy (anonymous) posted on
Syzygy
Folks, please do the math.

Let's deal with a $100,000 balance here.

AARP Savings is currently paying a flat interest rate of 4.65% for their Jumbo Money Market Account.

Alliant Credit Union is paying a flat interest rate of 3.93%.

On our balance above. you would make just $60 more per month at AARP than at Alliant.

With Alliant CU, there is no middleman Waterfield or Affinity or whatever.

With Alliant, there is no worrying at all.

With Alliant, there are no questions, no mortgage mess, no bankruptcy, no wondering if someone will transfer your money into an alternate bank, no nothing. Just $60 per month in interest less.

Now, I think 100% of the people will agree that AARP Savings will be lowering that 4.65% rate as soon as they get enough deposits. So when that happens, assuming Alliant keeps their rate at 3.93%, that $60 per month loss will decrease.

So the question begs: Is dealing with all these unknowns of Waterfield/Affinity worth $60 extra per month?

You tell me...please.

Thank you.

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Comment #26 by Anonymous posted on
Anonymous
Syzygy, yes I agree that $60.00 per month is no big deal, but what if you have $1,000,000.00 in the AARP jumbo money market acct. That's $600.00 per month or $7200.00 more per year and that doesn't include compounding.

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Comment #27 by Syzygy (anonymous) posted on
Syzygy
Oh come on, Anonymous!

Don't be ridiculous.

No one with $1,000,000 in cash would put that much in one bank. Just wouldn't do it.

First of all, do you know how difficult it would be to insure $1,000,000?

If you were solo, you would need 10 qualifying beneficiaries? Who has that?

If you had $1,000,000 in cash and only wanted to be in FDIC or NCUA insured accounts, you would spread it out over a few banks. Maybe $200,000 or $300,000 in one bank tops. You could put $200,000 spread out over 5 banks, like Alliant CU, Countrywide, Corus, IndyMac, and AARP.

I chose $100,000 because the majority of the people who read this blog probably have $100,000 or less they would want to put in each bank. Yes, there are some with a lot more money, but I am guessing the majority who read this blog only want to put $100,000 or less in each bank.

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Comment #28 by Claudine (anonymous) posted on
Claudine
Also, since both banks do compounding, compounding is not a factor in in these specific points.

It is still $60 per month per $100,000 if both banks compound, which they do. Alliant CU is 3.93% (4% APY), and AARP is 4.65% (4.75% APY). That is approx. $60 per month interest difference on a $100,000 balance.

There are endless questions and concerns with AARP...so much that Bank Guy has done two huge postings about them in a short period.

There are no such questions or concerns with Alliant.

For $60 per month less money, I don't have to question anything.

I am also wondering if it is worth the questions or concerns for $60 extra per month.

If I had a million in cash, I doubt I would care about the extra interest and just be safe so I don't lose my money, and I certainly wouldn't put $1,000,000 in a bank where I had a middleman company like Waterfield managing my $1,000,000!

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Comment #29 by Certificate of Deposit Rates (anonymous) posted on
Certificate of Deposit Rates
Trevor,

If someone has POD on the account (and it must be on the account title, I left a comment over on the ANB discussion with some feedback from the FDIC about this) then additional amounts above $100,000 can be insured. So forgive me if I gave anyone a scare that is opening up POD accounts. However, with multiple parties involved with this deal, you need to make sure, and I can not stress this enough, that if you are opening up POD accounts make sure the title on your account has either "POD" or "ITF" in it. Just having qualified beneficiaries in the account records is not enough according to the FDIC.

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Comment #30 by Gloria (anonymous) posted on
Gloria
Hi,

I do know:

If I mail in a personal check for deposit, AARP Savings won't start paying me interest on my new deposit money until the second business day (many banks will start giving you interest on the deposit that same day they input your check).

I don't know:

I received an ATM card for my Jumbo Money Market Account. Does anyone know if AARP Savings will reimburse me the ATM fees if I withdrawal money from say a B of A ATM? Also, does the 6 transaction per month limit apply to ATM withdrawals?

Thank you,

Gloria

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Comment #31 by Aditya Mishra (anonymous) posted on
Aditya Mishra
Interest rate down to 4.05% for appplications after 5/24/08.

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Comment #32 by Chester (anonymous) posted on
Chester
thank you, Aditya.

Wow! It didn't last very long after all the bank blogs finally posted about it.

Now...is it worth signing up now since you have to deal with a middleman when you can get 3.93% from Alliant?

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Comment #33 by Still Sofa King Frustrated (anonymous) posted on
Still Sofa King Frustrated
Well, people, I guess we don't have to doubt the legitimacy of AARP Savings anymore.

If you sign up today for a Jumbo MMA, you will only get 3.93%, with an APY of 4.05%.

If you signed up prior to today, you are still getting that 4.75% APY, but this is only temporary. Maybe for a month? The reason is, they got a huge amount of sign-ups this month of May, and they know if they drop the rate for all of these new accounts in just a few weeks after opening, there would be a mass exodus. Why? Because you can now get the same 3.93% from a few other banks and credit unions...and you wouldn't have to deal with a middleman like Waterfield or Affinity!

Watch AARP's sign-up rate to now plummet.

And I urge all depositors who signed up this month prior to 5/24: when our account also drops to 4.05% APY, we all need to bank hop over to perhaps Alliant CU or another bank paying a similar rate, which might show AARP Savings that they just shouldn't have dropped the rate so soon.

Who is with me?

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Comment #34 by Michael (anonymous) posted on
Michael
I just got off the phone with a nice female CSR at AARP. I guessed my call would not be successful, but I thought I'd try anyway.

My AARP Jumbo MMA is 10 days old.

I asked her how long I can expect my 4.65% rate to last until it too is lowered.

She said she had absolutely no idea, but of course I should keep in mind that my rate is variable.

Basically, she was saying my rate will of course drop to equal that of all the other post 5/24 accounts, but that they did not tell her when.

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Comment #35 by gary (anonymous) posted on
gary
Interesting... got checks today. They are printed with Huntington logo, identical to that of checks from my other account which was opened at directly at Huntington. But, the routing number on the AARP chekcs is for Alliant FC, not Huntington.

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Comment #36 by Potter (anonymous) posted on
Potter
Gary, what is "Alliant FC"?

That isn't Alliant Credit Union, is it?

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