AssetBuilder Inc. Registered Investment Advisor - Simple Investing. Smart Future.

 I am brand new here, and I apologize if this question has been answered lots of times already--I was not able to find anything with the search function.

Several financial services companies are offering high-yield CDs (typically 3-month, 7%, $10,000 minimum) issued by FDIC-insured banks. Advertisers in my paper this morning are First Fidelity of South Texas, Interstate First Financial of Texas, and Hill Country Funding. Other than having to listen to hours of sales presentations for variable annuities and the possible delay and retreiving one's funds if the underlying bank goes belly up (because the account would be in the firm's name), what are the downsides to these deals? Thank you very much.

Hi Dav.

I know nothing about the "CDs" that you are talking about, however, if it's too good to be true, it's too good to be true.

Bryan

If I were to guess they're probably Callable CDs. If they are there is going to be a lot of fine print most of which will benefit the bank and not you.

I know very little about these types of CDs but a lot of times they're really 20-30 year CDs which the bank, not you, has the authority to close the account and the bank usually has the ability to drop that interest rate to 0% after the first 3 months and then you're stuck with a 30 year CD at 0%. (This was a real offering I looked at once, so really watch your steps)

 Ben

Dav,

The question is whether you can actually buy those FDIC insured bank CDs. Many readers have responded to similar ads for high yields and are regularly told that that opportunity has passed but an insurance company based product is available. This isn't a variable annuity but some other form of interest bearing investment.

I think the old saw applies here: If its too good to be true, it's too good to be true. Be on guard.

Scott

My thanks to everyone who contributed. I suspect that Scott is correct, and this is a bait and switch opportunity. I've decided to not investigate it further. Thanks again.