Hard To Believe Advertised Florida CD Rates

hwhiteco
hwhiteco   |     |   7 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?




Ken Tumin
Ken Tumin   |     |   6,056 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."

Ricochet
Ricochet   |     |   528 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
bobert   |     |   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.


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