Bank Scam #7: IRA CDs

Chittaranjan Bank Scam #7: IRA CDs

I searched on BankRate.com for the best rates on IRA CDs. The results were poor to say the least. If you lock your money up for a year, Citibank is paying an interest rate of 0.2%. So I ran some quick math and found out it would take approximately 350 years to double your money in their 1-year CD. Wells Fargo is paying 0.05%. Again, if you run the math, Wells Fargo will double your money approximately every 1400 years. Bank of America is paying 0.12% and Chase is paying 0.10%. Click here to see the current rates when you read this article.

What? You aren’t excited about doubling your money every 350-1400 years? I’m not either. When you factor in inflation at 3-4%, a CD seems like a guaranteed way to lose all the purchasing power of your money.

What bothers me today is the increasing number of Americans who lock-up their Individual Retirement Accounts (IRA’s) in CD’s. Yes, Bank Scam Number 7 is the “CD IRA” as placing your retirement money in a bank CD–where it will lose it’s value to inflation is not good for you, or anyone else.

Kutiatodu Who is a CD IRA good for? Good question.

A CD IRA is good for you if:

•  You want to help your banker retire. They can invest your money for personal profit and lend it to other customers at 8-30%.
• You want to double your money every 350-1400 years.
• You don’t care if your retirement money keeps ahead of inflation. Remember that when interest rates finally go up it is because inflation is likely higher. If a CD is earning 4%, inflation may be 6% or higher.

You may conclude that a CD IRA is only good for the bank?

Remember, the bankers themselves invest their money–while telling their customers to save in their bank.

There are always better alternatives to growing, protecting, and keeping your money growing faster than inflation. And because your banker may have an incentive to keep your money lazy in a CD (to hit their quota), it may be best to stop getting advice from banks altogether. Please forward this to anyone you know you may be placing their retirement money in CD’s.

My solution is simple:

Interview with 2 or 3 credit unions in your area and discuss what solutions they may have. Many credit unions have independent financial advisors who can show you some great solutions to put your money hard at work for you.

Lastly, have a great 2013! Strive to eliminate debt, and learn to live a BANK-FREE life!