Are Callable CD's For Real?

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Topic Author
Megamill
Posts: 94
Joined: Sun Feb 11, 2018 10:44 am

Are Callable CD's For Real?

Post by Megamill »

After a lost decade of our cash earning the same rate that the under belly of the average mattress yields, DH and I finally visited a local financial institution that was running a 19 mo CD special rate of 2.10% APY. And as the kind woman was processing everything and listening to us tell her how sick we were of our bank paying .000001% on our cash all these years and us being too chicken to invest it, she asked if we were working with a FA and we said no. Then she gave us a business card of the FA working for that branch and mentioned that he could tell us about callable CDs. She said that you never lose your principle on them and last year they made 17%!!! I said that we never heard of them and she said something like they cannot advertise them. Any BHs here know anything about these products? I love the idea of guaranteed principle preservation, and then to potentially earn 17% ontop of that??? It sounds too good to be true. Are these things for real or is this some type of scam?
Grt2bOutdoors
Posts: 23056
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Are Callable CD's For Real?

Post by Grt2bOutdoors »

Sure, they are as real as flying pink elephants. Red flags - earn 17% with no risk of principal.
- can not advertise this product, exclusive only product.
- Financial advisor - aka salesman
- Liquid
- “are you interested in earning even more money than our current special based on past performance”?

Well, since you’ve been reading the forum, what do you think? You are a prime candidate to get taken - love the idea of principal preservation and with juicy returns to boot, what can go wrong?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
gsmith
Posts: 215
Joined: Sun Mar 21, 2010 1:02 am

Re: Are Callable CD's For Real?

Post by gsmith »

The 17% is more then likely a scam, but a Callable CD is a FDIC insured deposit. (if this was anAamerican bank)

It's a regular CD, but it gives the bank the right to redeem it when interest rates plummet.
The bank would give you back your deposit, and then turn around and borrow money at a lower rate from somewhere else.
They were very common at one point, but nowhere would such a call option demand a 15% premium.

It is much more likely they are going to give you a sale pitch for a variable annuity, in which case you should still run, but it's probably legal.
Topic Author
Megamill
Posts: 94
Joined: Sun Feb 11, 2018 10:44 am

Re: Are Callable CD's For Real?

Post by Megamill »

Grt2bOutdoors wrote: Thu Apr 05, 2018 9:12 pm Sure, they are as real as flying pink elephants. Red flags - earn 17% with no risk of principal.
- can not advertise this product, exclusive only product.
- Financial advisor - aka salesman
- Liquid
- “are you interested in earning even more money than our current special based on past performance”?

Well, since you’ve been reading the forum, what do you think? You are a prime candidate to get taken - love the idea of principal preservation and with juicy returns to boot, what can go wrong?
Well, no doubt we are not as smart as you, which is why I posted the question here on this forum of fine experts.
123
Posts: 6424
Joined: Fri Oct 12, 2012 3:55 pm

Re: Are Callable CD's For Real?

Post by 123 »

The the placard or sign on the FA's desk that should indicate that non-deposit investments are not insured by the FDIC. That's why you have to deal with a separate person in a bank branch at a different desk for "investment" products - the purpose is to clearly separate the operations of the bank, where FDIC insurance applies, from that "other" area.
The closest helping hand is at the end of your own arm.
Grt2bOutdoors
Posts: 23056
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Are Callable CD's For Real?

Post by Grt2bOutdoors »

Megamill wrote: Thu Apr 05, 2018 9:30 pm
Grt2bOutdoors wrote: Thu Apr 05, 2018 9:12 pm Sure, they are as real as flying pink elephants. Red flags - earn 17% with no risk of principal.
- can not advertise this product, exclusive only product.
- Financial advisor - aka salesman
- Liquid
- “are you interested in earning even more money than our current special based on past performance”?

Well, since you’ve been reading the forum, what do you think? You are a prime candidate to get taken - love the idea of principal preservation and with juicy returns to boot, what can go wrong?
Well, no doubt we are not as smart as you, which is why I posted the question here on this forum of fine experts.
My attempt at humor may have come off wrong, apologize if you were offended. The red flags though still apply - if it sounds too good to be true, it usually is. This forum excels in pointing out ways to ferret these red flags.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Raymond
Posts: 1638
Joined: Mon Apr 16, 2012 6:04 am

Re: Are Callable CD's For Real?

Post by Raymond »

17%? I want some of what those guys are smoking.

Here's a link to callable CD rates: "Best Callable CD (Certificate of Deposit) Rates" - findrates.com

Nothing even close to 17%.
gsmith wrote: Thu Apr 05, 2018 9:26 pm...It is much more likely they are going to give you a sale pitch for a variable annuity, in which case you should still run, but it's probably legal.
So yes, the "17% with guaranteed principal protection" isn't going to be a callable CD, but something else that is much more lucrative (for the bank and the financial salesperson "adviser").

And you're *still* not getting 17%, no matter how they flap their jaws.

"We [the bank] cannot advertise them"?

Whatever...
"Ritter, Tod und Teufel"
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