The FDIC has informed us that they are receiving inquiries and complaints about certain companies advertising above-market interest rates for FDIC-insured Certificates of Deposit (CDs). Some of these ads display the FDIC logo or state "FDIC Insured." Many of these companies are not FDIC-insured banks. Rather, they are insurance or financial service companies that sell non-insured financial products. The small print in the ads may state that the company is not an FDIC-insured financial institution.

The advertised CDs generally offer above-market interest rates for only a short term, require a minimum amount, and insist that the customer visit a company office. The advertisement's goal is to attract consumers for the company's non-deposit products or services. If a customer asks to purchase the advertised CD, the company will direct the customer to a computer terminal in the company’s office to purchase a CD from an FDIC-insured financial institution that accepts Internet deposits. The CD will be offered at a rate lower than advertised. The company typically writes a separate check to the financial institution for the difference between the bank’s rate and the advertised rate for the term of the CD. Both checks are mailed to the bank, and the bank then issues the CD for the increased amount, but at the bank’s lower interest rate.

Things to consider:

• Consumers should carefully consider whether non-insured products are appropriate for their personal financial situation.
• Consumers should understand the terms of any CD they purchase.
• Consumers can research deposit interest rates at Web sites, such as www.bankrate.com.
• Consumers can verify whether identified financial institutions are FDIC-insured at www2.fdic.gov/idasp/main_bankfind.asp.
• Consumers can find information about FDIC deposit insurance coverage at www.FDIC.gov/deposit/deposits/index.html.

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