Dedicated to Deposits: Deals, Data, and Discussion

Annuity Advice from The Mole and High Rate CDs Advertised in Newspapers

The Money Magazine's undercover financial planner, The Mole, was asked by one of his readers about a fixed annuity being marketed at a presentation to senior citizens. The Mole's answer was to "Steer clear of this annuity salesman, as he is preying on your emotions and selling some righteously nasty stuff." The Mole describes how they play on your emotions and why the annuities are such bad deals.

Some of his advice was to "manage any anxiety you might have about financial security by keeping your safe money safe. Don't settle for an average-paying CD, however." I'm happy that this blog was one of the resources he mentioned for finding the best CD rates from FDIC banks and NCUA credit unions. For other resources, check out my finding-the-best-deals post.

Other places you may come across annuities are from financial services companies that provide CD locator services. When you see high rate CDs advertised in the newspapers, but the ad doesn't list the bank and it requires you to call to make an appointment, there's a good chance that the ad is from this type of financial service company. The CD is probably legitimate. The company typically acts as a middle man with a bank. However, they sometimes add in their own money which when added to the interest from the CD will result in the advertised high yield. This extra money is similar to the bonuses given out by timeshare salesmen. The financial service company hopes that the relationship they build with you will lead you into annuities or other products where they will earn commissions.

So heed the advice of The Mole, "always be on the lookout for anyone pitching a financial product using scare tactics. Never buy any financial product on the spot."

Thanks to the reader who emailed me news of this Money Magazine article.

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