One of our clients called asking us about this company. I can’t say whether or not they are a fraud or scam at this point, but there are some huge red flags that I want you to be aware of. I did make a call to the company and if they provide me information that satisfies my concerns I will be delighted to update this post.

Note: I purposely am not providing an active link to them. So if you want to visit their site you can copy and paste the link into your browser: http://metroxbrokersltd.com/?page_id=194

RED FLAG #1
On the bottom of most pages is a claim that they are a member of SIPC, FDIC. First only an FDIC insured bank can claim to be a member of the FDIC. FDIC insured banks almost always place the FDIC logo along with text such as “Member FDIC”. You can check out Ally bank: http://www.ally.com/ or CIT: https://www.bankoncit.com/ for examples. Metrox does not just claim that the banks they work with are FDIC insured, but that they themselves are. There is no bank called Metrox or anything close to their company name.

RED FLAG #2
I searched the FINRA database for a company called Metrox and there was no entry. I called FINRA and they also searched and searched a couple of other databases. They did not find any entry for Metrox. I called SIPC themselves and same result. So if these first two Red Flags aren’t enough to dissuade you…

RED FLAG #3
They are supposedly located in Los Angeles, California. I searched the California Department of Corporations database and again, no such entry found.

RED FLAG #4
I called the company and spoke with Bob Gordon. When I questioned him on the SIPC he told me Compliance would have to call me back. It has been 3-days and no such call. By the way, I am a Registered Representative with FINRA and when we do brokered CDs they are done through our Broker/Dealer in Colorado. If you asked me about being a member of SIPC I could give you my CRD# and my Broker/Dealer’s. You could easily look me and them up.

YELLOW FLAG #1
Hopefully you are dissuaded from trusting Metrox at this point. And most importantly, I hope anytime you are given an investment opportunity that you at least verify the organizations and memberships that a company claims to hold. What is scary about Metrox is their CD Rates are high, but not so high that you do a double-take. My client told me that they didn’t feel like they were being greedy looking at those rates. They were just trying to find a decent, safe CD return. Sadly, you won’t find them with this company.

So are Metrox Alliance Ltd. or Metrox Brokers Ltd frauds? It sure looks like it. Are they a scam? You tell me! Please, please be careful out there. I know rates are low, but don’t put your hard earned money at undue risk for a few percentage points. It clearly isn’t worth it.

If anyone has any dealings with this company please leave a note in the comments.

Thank you,
cd :O)

Updates 5/31/13: One of our readers provided some additional info.

• Neither Metrox Alliance Ltd. nor Metrox Brokers is a tenant at 3530 Wilshire Blvd., the address they show on their web site for their “U.S. Main Branch” (I spoke with the building managers at 213.639.6500)
• Their web site metroxbrokersltd.com was created April 10, 2013 in Australia and expires a year later.
• They offer annuities on their web site, but have no license from the CA DOI.
• They offer securities as well, but FINRA has no record of them.
• CA Secretary of State has no record of the companies.

When I called Metrox, they offered me a 48 mos. $200k CD at 2.95/2.99% ostensibly issued by JP Morgan Chase.

Grant (refused to give his last name) with initials GMY told me their parent is a major British company, the Alliance Capital Group, but that company does not check out, either.

Every time anyone calls, they immediately want your tel. no. and name – nothing else seems important.

If not an outright scam, I think this is a lead generating scheme for somebody.

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1. F & M Bank and Trust – Review
2. Nordstrom fsb – CD Rates
3. Washington Mutual (WaMu) Savings Account Rate

I survey the top 35 banks and credit unions that are available in the national market. So far credit unions have been a little disappointing with their rates. However, Pentagon has come through topping the nation with their rates on the 1-year to 4-year terms. They are the only credit union reaching the top 10 on the 1-year. There are 4 for the 2-year term and 6 on the longer-term CDs.

Rates Have Fallen a bit

Rates fell about 3 Basis Points across the board since October. Not huge, but I believe they will continue downwards. Interestingly the 1-year interest rates are still about 10 Basis points higher then they were in June. This could mean a couple of things. 1) Banks and credit unions are willing to pay a slight premium now, counting on lower rates when the CDs mature. Another year of low rates will cause some investors to stretch their term for yield and thus the institution is counting in locking the money in for a lower yielding, longer-term CD. 2) Banks and credit unions have a short-term need for funds. They anticipate slower loan growth and don’t want to lock in the higher paying, longer-term CDs. Below are the graphs for the average rates for banks and credit unions and business CDs. You will notice they are facing much lower rates.

It’s a Long Bomb to the End Zone

Corporate rates have taken quite a hit. Banks tend to place the biggest premium on retail CDs I believe because they hope to be able to sell other services such as loans and other investment products. Businesses generally have things in place and they are a much bigger ship to try to turn around. However, I believe if you can win someone over with a great rate and great service, you just might be able to get them to listen to you and I would believe such an account could be much more lucrative.

The Corporate rates have fallen 10 to 20 Basis Points across the terms. CD rates for banks and credit unions have fallen 3 to 10 Basis Points. And although the long-term rates have continued to fall, I still like to point out they are paying over twice as much as the 1-year rate. If you can find some long-term CDs with a relatively low penalty, do it. We have seen more and more banks and credit unions increasing their penalties. Time is running out on that strategy.

Although in football, the long bomb can be quite risky, rates are still likely to remain low for quite some time. A High Rate interception is very doubtful at this juncture. I think you will more than likely be facing even lower rates over the next two to three years. Get a little yield without too much risk while you can.

What are your thoughts?

If you find a good deal, let us know. Happy searching. Go Niners.
cd :O)

Related posts:

1. October 2012 CD Rate Update
2. August 2012 CD Rate Update
3. September 2012 CD Rate Update

1-Year CD Rates remain almost the same

The average rate for September 10th was 0.902. For October 3rd it is 0.903. Hardly a difference. There are 10 Banks above 1.00% for retail deposits. As promised I will also begin providing a graph for average rates that are available for institutional and corporate investors. There is quite a gap between the retail and institutional. The average 1-year rate available for other banks and credit unions was 0.532% and for corporations it was 0.587%. Like the retail rates, this is for the top 30 banks and credit unions available in the national market.

Long-Term vs. Short-Term

Another blog posted an article comparing the highest savings rates to the average 5-year CD Rates. I kindly pointed out that in order for the article to be fair, they would need to either compare both of the highest or both averages. Manipulating data to prove a bias does not score big points in my book. Even us using the top 30 rates could be construed as not realistic. Some would argue we aren’t looking at the whole market so the average is skewed high. However, how many people have enough money to have to worry about looking for that many banks or credit unions? In their mind it may be skewed low.

The 2-year, 3-year, and 5-year averages all moved up for the first week of October. My personal opinion is this is a short-term blip. In general there is still too much liquidity at the banks and they don’t need to compete for deposits. We hear this a lot when looking for banks for our institutional clients.

There is still a premium on the long-term CDs. The average 5-year is 1.63% for retail and 1.27% for credit union and bank investors. This compares to a 1-year at 0.903% for the retail and 0.53% for the banks and credit unions. Given that the Fed has indicated they will be holding rates low until 2015, I believe you can add some long-term CDs without losing much in the way of opportunity cost.

If you find a good deal, let us know. Happy searching.
cd :O)

Related posts:

1. September 2012 CD Rate Update
2. August 2012 CD Rate Update
3. CD Rate Update

1-Year CD Rates have Risen

The first thing you’ll notice is that the average 1-year CD Rates have risen. This week their are seven banks with a 1-year rate above 1.00% and because of the competition the high rate has edged up to 1.10%. In July it was 1.05%. Sadly, there are no credit unions in that top seven. Come on credit unions, you are supposed to have better rates. All but one of them is over $1 Billion in assets, but all are less than $10 Billion. The Mega Banks are not yet even close to having to compete for deposits.

Competition probably a better friend then the Fed

The Fed has stated they will be keeping Fed Funds at 0.00% to 0.25% until later in 2015. This means the government is going to continue to tell savers to take it in the shorts. However, as more and more people move their money out of banks searching for higher yields in alternative investments, banks will have to pay a higher rate to attract or keep your deposits. Specials may come and go quickly so keep your eyes peeled and hopefully you will have some funds available to take advantage.

Scale is important

On some previous graphs, I let Excel auto-scale, which gave a max rate of 2.00%. This gives the impression of rates looking better than they truly are. I’ve seen the same thing on graphs for stock returns and various indexes. You can scale something so that small increases look bigger than they are and large decreases look smaller. So consider the scale when you are looking at any graph. In the future, I will use a constant max of 7% for the scale. This gives the graph a much more realistic visual of the rates.

So where are those great rates?

CIT Bank (which we have featured before) has a 1y at 1.10% APY. Ally Bank has a 1.04% APY. In addition, we are working with a bank that has a 1.11% APY. After our special fee, you would net 1.06%. So if you are full at CIT and Ally, give us a call. The minimum amount that we can work with is $99,000.00.

If you find a good deal, let us know. Happy searching.
cd :O)

Related posts:

1. August 2012 CD Rate Update
2. Highest CD Rates — September 2009 Update
3. CD Rate Update

First, the below graph shows average 1-year and 5-year CD rates during February of each year since 1999. In most years, there is at least a 0.50% difference. Some years the difference was as high as 1.50% to 1.80%. A couple of years the difference was minimal, and although the graph doesn’t show it, we even had inverted yields a couple of times (i.e, the 1-year was higher than the 5-year). However, just comparing rates, we get an average difference of about 1.00% (4.412% vs 3.420%)

Second, the next graph shows what the return would have been if the client had abandoned 1-year CDs for 5-year certificates of deposit. I even went back a year to 1999. In February of 1999, the average 1-year CD rate was 5.207% and the average 5-year was 5.604% (one of those times, where there wasn’t much of an incentive to go long-term). In February of 2004 (5-years later), the average 5-year rate was 4.059%. In February of 2009 it was 3.313%. So the average return if they had done 5-year CDs was 4.337%. As stated above, the 1-year return was 3.420%. Looking at all of the opportunities to have switched, each 5-year series beats the corresponding 1-year rates. Note, I estimated a 5-year rate of 1.25% and a 1-year rate of 0.60% for February 2013 for the last series starting with 2003.

Some interesting observations

First, by extending their term a little the last few times the CD matured, the client boosted their average return to a 3.55%. Although that difference isn’t huge, it is a little bit. They opted for an 18-month roll in February of 2009, a 2-year in August of 2010, and just recently a 3-year.

There have only been three, five-year periods where rates increased (1993,1998 [not graphed]; 2002,2007 and 2003, 2008 [although rates were on a downward trend at this point]). In general, periods of rising rates don’t last longer than five years. So yes at some point, rates will rise (late 2014?), but more than likely, they will fall down again within five years (before 2019). Although there is a better than average chance that your 2017 5-year rates will be higher, that may not be true for 2018 and beyond.

Trying to time the market can be quite detrimental to your returns. When rates peaked in 2000 and 2007 many people shortened up their terms because they felt rates were going to keep going up. And as you can tell from the graph, rates went down in more years than they went up. As the evidence demonstrates, a long term CD ladder will beat the returns of a short-term one. Go with the evidence, not your gut. Your overall returns are much, much more likely to be higher.

It is never too late to create a 5-year CD Ladder. Although every fiber in your brain will scream at you for doing a 5-year CD in this market, the rewards of such are clearly demonstrated.

I would love some discussion. Especially if you have been investing in CDs for a while. What do your historical returns say? Please share.

Finally, if you enjoy this information, please consider sharing with your Twitter, Facebook, LinkedIn, G+, etc., friends.

cd :O)

Related posts:

1. Why buy a 10-year CD?
2. 10-year, 1-year CDs, & Blocked Ads
3. Discover Bank New CD Promotion

They lowered their 7-year CD rate from 2.40% to 2.02% and the 5-year from 1.90% to 1.71%. Those are still near the top, however.

CIT Bank began offering a 5-year last month and it is currently paying 1.90% ($100,000 minimum) or 1.85% ($1,000 minimum). They also have top rates on other terms. If you have funds coming up, I would keep CIT Bank on your radar.

Alliant Federal Credit Union is still strong on the shorter-term rates. They have a 1-year at 0.85% and a 1.00% for 18-months. Pentagon also remains competitive at 0.90%. We have a couple of banks paying a little over 1.00%. If you have Alliant and Pentagon already, you may consider giving our service a look. I’ll even reduce our standard fee to 10 Basis Points if you mentions this blog post. We can work with $100,000 or more.

There is still a 7-year CD at 2.40%, but it has a high penalty to close early. Another bank has a 7-year at 2.25% with a 9-month early withdrawal penalty. You can use our EWP calculator to get the equivalent yields. It comes to a 1-year at 0.567%, a 2-year at 1.409%, and a 3-year at 1.689%.

I’m working on an updated graph of average CD rates and I’ll post that later. I’m also working on one that goes back a few years and will include Fed Funds. But, I wouldn’t expect rates to increase anytime soon. And, there is a very good possibility of further rate declines.

Happy CD Hunting,
cd :O)

Related posts:

1. CD Rate Update
2. CD Rate Update
3. EmigrantDirect Savings Rate – Update 2 – Jan 2008

Compounding interest is when you place funds in any investment (often a CD) and you leave the interest in the account which then earns interest itself and your final earnings will be much greater. This can also be accomplished in securities accounts by electing to re-invest dividends.

Let’s look at a couple of examples.

Example 1: Let’s say you invest $100 into a 10-year CD at 3.00% APY with daily compounding. After 10-years, this will have grown to $134.39. Now, I realize, that doesn’t seem like much, but let’s keep going and see where we get. After 25-years, you will end-up doubling your funds.

Example 2: Let’s start with the same $100, but you also commit to adding $25 a month (which doesn’t seem like a whole bunch). Now after 25-years, you’ll have $11,289.52. That is pretty impressive. If you start something like that for a child or grandchild when they are 5-years old, when they reach 30, you’ll be able to present them with a sizable gift.

You will notice that I picked a pretty low interest rate. I did that on purpose. Even in a low rate environment, you can turn small amounts into a decent return. It just takes discipline. If you are able to get 3.50%, you will end up with almost $1,000 more, $12,203.77.

Example 3: Now that you are excited, you want to try to make a little bigger difference. How about an initial $1,000 investment with $50 added monthly. After 25-years, you’ll have $24,252.17

And for our final example, you take the $24,252.17 and maybe take a little risk. Give yourself another 25-years and still contribute just $50 a month. Let’s assume a 5% interest rate (well below historical averages for safety sakes). Your final total: $114,204.33. Now that is pretty darn impressive.

We have actually done something similar with our kids. Whenever they earned money, they had to put at least 10% into the bank. In addition, birthday and Christmas money from one of the grandparents also went into savings. Now, even with ridiculously low interest rates, they are able to stow away a decent amount for their first car. Obviously, the ones with more discipline are able to put away more.

I used the calculator linked from here for my calculations (http://www.hcuonline.com/HCU_Calc_PeriodicSavings.html). Interestingly, they seem to have decent savings rates for IRAs. Although, I suspect their field of membership is quite limited, shows you that the above is seemingly quite possible.

If you find this article helpful, please consider sharing with your friends on Twitter, Facebook, Pinterest, etc.

Have an awesome day.
cd :O)

Image: FreeDigitalPhotos.net

Related posts:

1. CD Interest Rate Run Down
2. Brokered Deposits, FDIC Scrutiny, Low Rates – Oh My
3. Other Posts of Interest

Pentagon Federal Credit Union and Alliant still lead the rate board on various terms. CIT Bank and Ally Bank are also strong contenders.

Special Offer

We do have access to a 2.15% APY for 5-years. As a special, we will only charge 5 Basis Points. Your net yield after our fee would be above what Pentagon is paying. Just shoot me a message if you want more details. This has a $50,000 minimum (for individuals only).

Rates continue to fall

One thing I noticed as I was updating the above posts, that the longer term rates had fallen 0.25% to 0.50% since last year. The shorter-term rates had not fallen as much. I have noted before, that the longer the Fed holds rates low, the flatter the yield curve will get. There is still too much uncertainty across the world for the Fed to have any reason to change their stance. Other than the Fed, supply and demand can have an affect on rates, but banks are still sitting on way too much cash for them to need to start a price war amongst themselves.

Recent Articles

I also wanted to let you know about some of my writings elsewhere. We have been partnered with the Gobanking network for sometime and I have written a few articles over there. Let me know what you think. If there are any topics you would like me to tackle, let me know. Always looking for ideas. Never Close a Late Night Deal Safest Investment for Your Refund CD Rates Are Terrible, But Who Cares?

Have a great week.
cd :O)

No related posts.

One of our readers alerted us to a special 1-year IRA CD at City County Credit Union. However, it is limited primarily to some counties in Florida. If you are in the vicinity, take a look.

Their official name is City County CU of Ft. Lauderdale. The two basic criteria for membership are:

• Anyone who lives or works in Broward, Palm Beach, Miami-Dade, Brevard, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Indian River, Lake, Lee, Manatee, Marion, Martin, Monroe, Okeechobee, Orange, Osceola, Polk, Sarasota, Seminole, St. Lucie or Volusia County, Florida
• Licensed professionals and their employees

I sent an email for clarification on the 2nd option. But I’m guessing it is law related by looking through some of the select employee groups.

Their CD rates are competitive and they do give a little bump on the rates for $50,000 or more. However, the 1-year IRA special really stood out at a 1.25% APY. But it has to be from new money and be $10,000 or more. They have a 5-year CD at 2.05%.

One thing of interest in the disclosures is that “deposits can be made to a certificate any time during the term and will not change the interest rate or maturity date of the account.” This is pretty rare with CDs and with a special like that for the IRA, could come in pretty handy.

So if you are in their area, check them out. Happy CD Hunting. cd :O)

Related posts:

1. Earthmover Credit Union – 10%, 10-month CD Rate; $1000 Max
2. Oregon Credit Union – OnPoint Community Credit Union – 5.25% Certificate of Deposit
3. Pentagon Federal Credit Union – CD Rates

From our good friends at DepositAccounts.com. And I actually do count Ken as a friend. We have shared content and emails before on various subjects.

For other bank reviews, Click Here for the blogs main page or Here for our placement service.

SunTrust Bank is quite a large bank with branches primarily in the South East. They were established in 1891 and obtained FDIC insurance in 1934 during the Great Depression. The original name was Trust Company of Georgia. Over the years, they acquired and consolidated numerous other Trust Company banks and then began acquiring other SunTrust Banks in the 2000. They are a large bank and healthy bank. They will take deposits from other parts of the country. You just have to provide proper documentation.

SunTrust Bank has decent rates, but the 6-year is fairly competitive at 2.00%. However, the early withdrawal penalty can be quite substantial and is based on the remaining term. For example, if 3-years are left on the term the EWP is 2-years of interest. So if you opt for the long term CDs, it will almost certainly be a “buy-and-hold” situation. They also do IRA CDs.

Happy CD Searching – cd :O)

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1. World Savings Bank CD Rates
2. CIT Bank – Bank Rates Review
3. IndyMac Bank Certificate of Deposit Rates