bank rates

AIG Bank: Burning Bridges With Depositors

AIG Bank logoWith a 12-month CD maturing at AIG Bank next month, I recently checked this online bank’s posted rates to see where I stood.

I wasn’t prepared for what I saw.

AIG’s 12-month rate was 0.65% APY.

Of course, I was expecting a 1-year rate lower than the 1.01% APY I currently enjoy. But not four-tenths of a percentage point lower than the best deal on our CD Rates Leaderboard.

Even more surprising, AIG’s 24-month CD rate was 0.65% APY – as were its 36-month and 60-month rates!

The only alternatives were a 6-month CD at 0.30% APY and a money market account with a 0.60% APY for balances of $10,000 or more.

The bank certainly wasn’t providing me much choice.

What bothered me most about all this was that I’ve always viewed AIG one of a handful of online banks that seemed to cultivate long-term depositor relationships.

First, its CD rates, while never at the very top, have usually been at least in the same ballpark with those of leading online banks.

Moreover, since I opened my first CD there, in early 2009, the bank has conducted periodic promotions exclusively targeting existing customers in which it’s offered 12-month CDs at rates higher (about 0.10%) than those then posted for the general public.

In fact, I purchased the CD maturing next month in such a promotion.

Also, when CDs matured, the bank usually offered me (and, I believe, other customers) a modest bonus over posted rates (again, about 0.10%) to keep my money in a CD there.

When I asked last week, however, I was told loyalty bump-ups weren’t currently being offered, although I was encouraged to check again closer to my CD’s maturity date.

Finally, AIG has a customer-friendly staff, which not only is courteous and helpful but appears largely immune to turnover.

Unfortunately, the bank now seems to be going the route of many other institutions, trying to further cut its funding costs and/or shrink its deposit base.

I suppose I really can’t blame any bank or credit union for engaging in this activity. It’s a natural reaction to the scorched-earth monetary policies of the Fed.

But they may find they’ve permanently burned bridges with long-term depositors.

Some of us may go away – and stay away.

But I guess that’s unimportant in a world where the government is watching the backs of financial institutions, not their customers.

Don't miss out on the next bank deal. Get the newest deals delivered straight to your inbox!

Comments (0)
1 Star2 Stars3 Stars4 Stars5 Stars (1 votes, average: 4.00 out of 5)
Loading...
No Existing Comments

Comments are closed.