Wow! AIG Bank has been in our database of top CD rates and savings accounts nationwide for as long as I can remember. Just this week, however, they’ve announced that come September 30th of this year they will cut all of their FDIC insured retail savings products from their arsenal.
They didn’t go into much detail regarding the matter but we can only assume its due to the continued abysmal market conditions for savings products in general.
The official letter they issued to the public didn’t state much said they had the desire to be a “a trust only organization.” Meaning they will continue to handle the savings side for their large accounts, but retail deposits will no be longer available.
What happens to AIG deposit holders?
We found it weird that AIG bank wont even hold people’s deposits until maturity (but they will pay out as if they did).
Unless your deposit matures before September 30th, you’ll be getting your funds back with their accrued interest up until that date PLUS the interest that would have been garnered throughout the life of the CD.
So, for example, if you just recently locked in a nice 5 year CD with them (they featured one of the highest 5 year deposit rates around) then you’ll be getting your money back plus the interest accrued from the time you opened it until September 30th PLUS the interest that would have been accrued had the CD remained open until maturity. Not a shabby deal for those that just recently went long on a CD with AIG!
Of course there will also be no early withdrawal penalties since its a forced closure by AIG.
If your AIG deposit is maturing between now and September 30th you’ll have to do some shopping for a new bank because they won’t be automatically renewing as most CDs do upon maturity.
CD and Savings Market
The FDIC insured savings market is obviously not a hot one. The average rate for a one year CD today sits at around 0.75% APY and the average yield for a money market or online savings account sits quite a ways under that at 0.50% APY.
It also doesn’t help that inflation has been between 1.50% and 2.00% all year long and is projected to stay within that range until at least 2014.
All that being said, these are still products that a healthy portfolio has. Any interest is better than none and cash that would have just remained as cash should still be plopped into one of these accounts. Below is our database of today’s top rates for a wide range of CD products. You may want to focus on other elements besides rates and APY’s though since there is very little competition between banks on this front.