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:
- Update on AARP Financial Savings Center - 4.50% Savings Account, 4.75% MMA
- Overview of the AARP Financial Savings Center
Thanks to all the readers who shared their experiences and research.