FDIC targets ads for above-market CD rates on clarkhoward.com

The FDIC has announced a settlement with a company running ads for above-market CD rates in 80 newspapers nationwide.

AmeriLife First Financial LLC reportedly used the high CD rates as a lure to get people in to buy annuities or other investments.

However, those who stood their ground and held out for the advertised CD rates got what they wanted. AmeriLife would pay a bank in cash to issue the CD at the advertised rate.

What a business model! Apparently the loss they took on the CD rates was outweighed by the gain of the sales commissions made on annuities.

Interestingly, AmeriLife put out a press release disputing the FDIC's findings.

The message here for you is be careful anytime someone promises you what exceeds what you can safely earn on a CD.

And remember, it almost never makes sense to buy an annuity. The only kind of annuity that Clark recommends if you're looking to not outlive your money is an immediate payout or life annuity. But you'll rarely hear about this option from salespeople because the commissions on it are so low.

What others are saying

Almost fell for it until I found this
http://afireceivership.com/documents/first_amended_complaint_072507.pdf
By John M. @ 11/16/09 09:32:08 AMreport abuse
CD RATES
WHAT DO YOU THINK ABOUT THE 12 month , 3% RATE, OFFERED BY AMERIFIRST DIRECT. THEY SAY THEY ARE IN THE INSURANCE BUSINESS AND THIS IS FDIC INSURED. THIS WOULD BE A JUMBO CD
By FRED CHASTAIN @ 07/29/09 11:42:35 PMreport abuse
miss spoke
the interest was 5% not 7 % on the last letter for a very short time ..it was an allstate annutiy
By ann wolf @ 06/29/09 04:35:24 PMreport abuse
annuity
my husband died and i trusted this bank official to help me invest,,,my money tied up for 7 years and at first for a suck in 7 % then less than 2 ,,i have one year left and can not get it out of there fast enough..very bitter against this no account woman should be in jail with madoff
By ann wolf @ 06/29/09 04:31:37 PMreport abuse
immediate annuities
due to pathethically low interest rates, even this type of annuity is a rotten deal. with inflation probably about to rear its ugly head, i would advise anyone considering an immediate annuity to delay that decision or at least buy in with no more than 20% of your cash. And then only do this if you have paid off 100% of your debt as that virtually guarantees a higher rate of return.
By brian @ 06/26/09 10:30:51 PMreport abuse

Almost fell for it until I found this

http://afireceivership.com/documents/first_amended_complaint_072507.pdf

By John M. @ 11/16/09 09:32:08 AMreport abuse

CD RATES

WHAT DO YOU THINK ABOUT THE 12 month , 3% RATE, OFFERED BY AMERIFIRST DIRECT. THEY SAY THEY ARE IN THE INSURANCE BUSINESS AND THIS IS FDIC INSURED. THIS WOULD BE A JUMBO CD

By FRED CHASTAIN @ 07/29/09 11:42:35 PMreport abuse

miss spoke

the interest was 5% not 7 % on the last letter for a very short time ..it was an allstate annutiy

By ann wolf @ 06/29/09 04:35:24 PMreport abuse

annuity

my husband died and i trusted this bank official to help me invest,,,my money tied up for 7 years and at first for a suck in 7 % then less than 2 ,,i have one year left and can not get it out of there fast enough..very bitter against this no account woman should be in jail with madoff

By ann wolf @ 06/29/09 04:31:37 PMreport abuse

immediate annuities

due to pathethically low interest rates, even this type of annuity is a rotten deal. with inflation probably about to rear its ugly head, i would advise anyone considering an immediate annuity to delay that decision or at least buy in with no more than 20% of your cash. And then only do this if you have paid off 100% of your debt as that virtually guarantees a higher rate of return.

By brian @ 06/26/09 10:30:51 PMreport abuse

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Jun 26, 2009 -- FDIC targets ads for above-market CD rates

What others are saying