Hard To Believe Advertised Florida CD Rates

hwhiteco | Sep 29, 2010 | 5 posts since 2010

Regarding a 3.95% APY, 12 Month CD through "Orlando First Guaranty" FDIC-Insured, and a 4.01% APY, 6 Month CD, "insured and guaranteed" through "First Financial Group" advertised recently (9/8 & 9/26) in editions of the Orlando Sentinel ; I imagine both of these would fall into the "to good to be true category," but does anyone have any experience with either of these firms or know how they operate?

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Ken Tumin | Sep 29, 2010 | 5,947 posts since 2009

Please refer to this post to see how these companies can advertise these high CD rates.

The FDIC actually had a consumer news tip on these types of advertised CDs. Here is an excerpt from that FDIC article:

it could be a marketing ploy. "An offer of a very high interest rate may be a lure to promote the sale of non-insured products," said Richard M. Schwartz, an FDIC attorney who specializes in consumer issues. "Some non-bank companies are using the FDIC logo and good name to draw customers in the door for a bank CD, but sooner or later, they're going to try to lock them into a long-term investment that may not be in the customer's best interest."

Ally6770 | Sep 29, 2010 | 2,380 posts since 2010

If you use the Bank Reviews button at the top and put in First Guaranty there is one in Jacksonville that has one star out of a possible 5. Also I believe that First Financial Group is a brokerage company. Their CD's would not be FDIC insured. I would google them and maybe even call the state capitol and find out if they are registered and if there have been any complaints or lawsuits filed against them. Maybe the state capitol's website would be a help.

bdevoogd | Apr 26, 2011 | 1 posts since 2011

I work for First Financial Group and all the CD's are FDIC insured. This is not a scam, however with any promotion there are conditions. The banks we use limit the amount of the deposit or length of the offer. The banks use high rates to get new customers so you can not get the high rates twice from the same bank. That is why in the ads we are listed as CD locators, we will hunt for great rates all over and show you the best we find. You will get the rate in the paper and it will be insured.

Ricochet | Apr 26, 2011 | 329 posts since 2010

I have done this before and its an OK way to get a little boost in your CD. Had no problem at all with redemtion. Yes you have to listen to a "rap" from the dealer,but they will add the bounus to your CD. If you got the minimum funds for the deposit whats the worry? Some people here and on FWF would sqeeze a rock to get a drop of blood (tenth of a %) all the time. Just like us rate chasers.

bobert | Apr 27, 2011 | 19 posts since 2010

These investment companies DO NOT themselves provide the CDs. They basically limit the amount of deposits, and periods of time, so the advertised rate looks good, but the overall impact can be a whopping $50-$100 or so more than the market. These firms are paying that (adding it to the yield) to get you to come in to their shop and listen to all the products they want to sell you, such as annuities or life insurance products (all of which carry a 5% or higher immediate commission to them). So it's kinda like going to a presentation/seminar on a time-share condo to get a free steak dinner (value of about $10). YES - they are real, but is it worth your time and getting "the hard sell" treatment. For the few extra dollars here, it is best to just avoid them and look toward the banking industry directly.