How Financial Companies Can Advertise Very High CD Rates In Newspapers

Ken Tumin
  |     |   6,078 posts since 2009

Every Sunday when I’m looking for bank specials in newspaper ads, I come across ads that list very high short-term CD rates. However, the ads are not from banks or credit unions.


An example today is an ad that was published in the May 18th Tampa Tribune. The financial company Fidelity Deposit Corp is advertising 3.15% to 7.00% APY. The ad has very few details.

Another example is an ad that was published in the May 22nd Denver Post. The financial company First Financial Group is advertising a 4.00% APY 6-month CD. This ad does have some important small print. Two important details include “promotional incentives included to obtain yield” and “rates may vary depending on deposit amount”.

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.

Allan Roth in his CBS MoneyWatch blog has also written about these financial companies which advertise these CD rates.

In his latest blog post he reports on his new investigation into American First Insurance and the inaction of the Colorado financial regulators:

I can only wonder how many Colorado consumers responded to the CD advertisement and ended up walking out with an annuity. Since it was done with the full knowledge of the Colorado Division of Insurance, I think the Insurance Commissioner and all employees involved are doing anything but protecting the consumer.

  |     |   4,118 posts since 2010
I've known elderly people that fall for these scams. It's truly a shame that something isn't done about this. I see ads like this in major newspapers all the time. With CD rates so low, desperation sets in for many people on fixed incomes, and they go for the bait.
Ken Tumin
  |     |   6,078 posts since 2009
Considering how much they advertise, I'm afraid they must make quite a profit with their annuities.

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