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AIG Bank Shutting Its Doors To Savers

AIG Bank logoAIG Bank has advised depositors that, as of Sept. 30, it will no longer service retail deposit accounts.

According to a just-released letter, existing accounts will be closed as of that date and deposits “including all interest due on your account(s) will be returned.”

The bank will be converted to “a trust-only organization.”

AIG’s letter indicates that savings and money market accounts, whether closed automatically on Sept. 30 or earlier by the depositor, will receive interest through the date of closure.

Account processing (including honoring of checks) will be discontinued on Sept. 13.

The letter states that CDs having a maturity date after Sept. 30 will be closed on that date, and the accounts credited with “accrued interest, plus all interest which would have been earned had the account remained on deposit for the full term …” (emphasis in original).

You can close a CD prior to Sept. 30 without penalty, but only with interest accrued through the closure date.

For CDs maturing between Aug. 26 and Sept. 30, “the CD will not renew automatically and the funds will not continue to earn interest after the maturity date.” (emphasis in original)

The letter seems to indicate (not terribly clearly) that these CDs also may be closed by the customer prior to maturity, with no penalty and with interest through the date of closure.

Presumably, the Aug. 26 date was chosen to meet the Truth in Savings Act requirement that depositors receive at least 30 days’ advance notice of adverse account changes.

The letter doesn’t explicitly address early closure or renewal of CDs maturing on or before Aug. 26 (as my three CDs do!).

However, the bank is allowing me to close my CDs early, with no penalty and interest accrued to closing.

I strongly encourage AIG CD depositors to contact the bank to make sure they understand the available options.

There’s no explanation of why AIG is abandoning its deposit business.

However, regulatory considerations, including implementation of Dodd-Frank financial reforms, have undoubtedly played a significant role.

I’m going to miss this bank.

For a long time, AIG offered competitive nationally available CD rates and followed a practice of periodically offering existing depositors special CD deals at premiums over posted rates.

Plus, it has a knowledgeable and friendly customer service staff.

And that makes low deposit rates a whole lot easier to stomach.

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