Featured Savings Rates

Unusually High Interest Rate Of A FDIC-Insured CD Advertised In Your Local Newspaper

Ken Tumin
Ken Tumin   |     |   5,943 posts since 2009

As I was looking for bank specials in newspaper ads this Sunday, I came across a few ads that list very high short-term CD rates. However, the ads are not from banks or credit unions.

One example is American First Assurance in Denver and Colorado Springs which is advertising a 3.85% APY FDIC insured 6-month CD in the 10/31/2010 Denver Post.

Another example is Firstar Financial Group in Oklahoma City which is advertising a 2.13% APY 11-month no penalty CD in the 10/31/2010 edition of The Oklahoman.

The small print is important to read for these. The Denver one has quite a few details in its small print. It states that the yield includes an interest bonus of 2.25% plus 1.60% interest. For a $25K deposit the 2.25% for 6 months comes out as a bonus of about $281 which is likely paid by the company.

To learn why and how financial companies offer these CDs, please see my review of this FDIC article: Beware of an advertised CD rate far above the competition.

I posted on similar advertised CDs in this April thread