10 Insider Secrets that Your Bank Doesn't Want You to Know about CDs

By Michael V. DraytonFOXBusiness

Fifty years ago foreign governments prided themselves on 3 things: 1. Military 2. Economic resources 3. Secret agencies & their ability to keep secrets

Continue Reading Below

Fast forward 50 years, and one of those three same remnants is consistently being utilized not by foreign governments, but by global and local banks.

In a world that prides itself on complexity and secrets. How is it that banks and bankers have never ever revealed their secret codes of banking to the public?

How is it possible in the 21st century for your Aunt Mildred to deposit her lives savings into a bank CDs only to realize that those bank instruments only benefit the banks and not dear Aunt Mildred?

Always remember what one banker once told me, “The bank’s best interest always comes first.”

Let me give you a real-life illustration. My client’s sister was simply stunned to hear what her banker of 29 years told her: “I’m really sorry, Myra, but I can’t do any better than 0.10% on your bank CD. If you want to tie it up for 5 more years, I can get you a little over 1.31%, but that is it!”

A lousy 0.10% on CDs? What’s Myra going to do?

Myra asked him, “Why was I still paying 18.99% on my credit card balances, when the bank was only willing to pay me 0.10% on my $80,000 savings account?” The banker just turned his head and mumbled, “That’s just the rate we’re paying these days.”

Fortunately for Myra, her sister introduced her to our firm, and we were able to help her significantly. Does this scenario sound all too familiar when you talk to your loved ones regarding their financial security and future?

Did you know that there are financial alternatives that pay higher interest than bank CDs? Did you know that they are safer than bank CDs, and that your money is more liquid—that is, easier to get to! Did you know that your bank probably even sells these other financial alternatives? So, why haven't they offered them to you? Always remember the #1 rule for banks is that the bank’s best interest always comes first! And now get ready to learn the top 10 Insider Banking Secrets Your Bank Has Hidden From You...

Secret #1: Banks have controlled people's minds through fear and the FDIC(Federal Deposit Insurance Corporation)! Banks wants you to believe that CDs are the answer to everyone's savings prayer. According to the FDIC website, there have been more than 482 banks which have failed since the year 2000! This is one of their closely guarded secrets. Banks do not want you to know there are safer financial alternatives that provide greater returns of interest.

Secret #2: The low interest paid on "safe" CD money is taxable whether you take it out or not!

Secret #3: Banks pay only about ½ the interest on savings compared to other financial alternatives. Plus the interest is taxable! Why?

Secret #4: Your CD interest can reduce your Social Security benefits.

Secret #5: Your CD will not increase your benefits if you are totally or partially disabled. There are other financial alternatives that will. Why not banks?

Secret #6: After taxes and inflation your CD interest is reduced to almost zero. Inflation and taxes will continue.

Secret #7: Your banker knows the real secret of wealth accumulation. But, why doesn't he tell you? It's the power of tax-deferred accumulation. Ask how much of his money is in CDs.

Secret #8: Your CD cannot give you multiple compounding. That's interest on the principal, interest on the interest and interest on the tax-deferred savings!

Secret #9: Your CDs cannot give you tax-free monthly income. There are other financial alternatives that can.

Secret #10: Your CD cannot be passed on to your heirs without costly probate time and expense.

An annuity is a safe and secured compounded growth instrument, guaranteed on a tax-advantaged basis with the ability to capture a percentage of the market index without the risk of you losing 1 penny of your principal or any prior gains that you earned.

“From the standpoint of the contract holder, a deferred annuity during its accumulation period does not significantly differ from the long term certificate of deposit (which incidentally, also may be subject to penalty if it is surrendered prematurely), or any other portfolio investment which may be reduced to cash at any time. Nevertheless, interest from other portfolio investments is taxed currently whereas earnings credited to a deferred annuity are not.

To the extent that annuities can be fashioned to offer interest rates that are competitive with rates paid by other financial instruments, there is little reason why a potential investor should purchase anything but a deferred annuity.” -Honorable John E. Chopton, Former Assistant Secretary of the U. S. Treasury

After reading this article, is there any reason not to hear about other financial alternatives? Pick up the phone and call me at 678-522-3914 or toll-free at 1-877-522-3914.

Michael V. Drayton, is a well-known financial advisor who advises retirees across this nation on wealth distribution strategies to increase income, reduce taxes and pass wealth tax free to heirs. You may have visited his popular website at www.4safemoney.com perhaps you have attended one of his relevant and timely educational workshops. Michael is licensed in the states of: AL, GA, LA, MI, OH, TN, TX, VA, WI.