Bank of America High Yield CD offer?? for real?

Question

i just saw the online ad for the new 7-month CD with BofA...for 4.11%, and i had a question about its wording. when i went to the site, there's this asterisk that states:

1' The Annual Percentage Yield (APY) is accurate as of 7/23/2008. This promotional APY applies only to the initial term of a new High Yield CD with a 7-month term that is opened online through bankofamerica.com. We may change this promotional APY at any time without prior notice. The minimum balance required to open a High Yield CD is $5,000. We may limit the amount you may invest in one or more High Yield CDs to a total of $500,000. Alternative terms not allowed'

What's getting to me is the line: 'We may change this promotional APY at any time without prior notice'. Does this mean that if i open the CD now, at 4.11%, they can change that rate to like 2.5% during the 7months i have it with them? I thought that CDs were locked into the rate you started with, up until the time your account matures?

Answer 1

I'm baaaaaack! :-p

Next morning here and I "edit" to add this;

This morning I see WaMu WooHoo!  3.3% APY on-line saving/checking?

It seem this one could change the next day after opened. As mentioned below, it may be highly unlikely a Bank resort to a shady deal.

I begin to think we will see more "good deals" and people best read the * and ** stuff!!

Months ago there was an ad on TV, it lend you $5000 no questions other than a Job and Bank Account. I think something like that. If people read the fine fast print (Shows for about 5 seconds) at bottom. I believe it says 99.9% APY for the loan. I may be mistaken.

In sources I give the WaMu spill!

I understand it to say you locked it to 4.11%, if that what offered at the time you open, but, only for 7 months. When the 7 months are over you may not be able to get the same % rate.

The "Fat Red Pig" we see rolling around on TV have an intro rate also, I not remember the ending date, just watch and listen. It good % for a savings account, but, what it go to when the promotional end?

BoA is for 7 months, then what?

Answer 2

Cds have a fixed interest rate (ie. APR will not change until maturity), however what they mean in the fine print is that when they automatically renew your CD after the term ends, they can change the yield to anything they want.    Also look for the words "The CD may be "callable."" meaning the bank can close the CD before maturity.  I think you should be fine with BoA.

wikipedia Certificate of Deposit.

"They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. "