Ads for high rate CD Offerings

Terry,

We often see advertisements in the Chicago Tribune from Sun Cities Financial Group offering higher yield short term CD rates. Currently they are offering The Presidential CD : 6 Months at 4.5%. Do you have any experience with Sun Cities and these offerings? Would you recommend them? Sounds great in the current environment.
Thank you for your time.

Terry Says:  Several people have written to ask about high-yielding CDs and I have tried to track these down.  From what I can gather, there is a minimum investment — and the “interest rate” includes a “bonus” that would make the rate as high as advertised — IF it could be gotten on an annual basis.  But these are short-term CDs paying far less for the first 6 months!  It’s a marketing trick.  Please don’t fall for it.  It’s today’s version of the old “free toaster.”   Once they get your money, you’ll have a tough time getting it back as it may have hidden fine print that you have to keep your money there for a longer period of time earning virtually nothing at the end of the 6 month deal.

There is absolutely no such thing as a 4.5 annual percent rate on a 6 month FDIC insured CD without some kind of huge trap.  I just wrote a column about low interest rates and how frustrating they are to seniors.  That opens the door for all kinds of dirty tricks and this is one of them!