Highest CD Rates Commentary – Updated July 2009

Updated our running commentary.

Highest CD Rates

cd :O)

FDIC closes seven banks

Last night, July 2, 2009, the FDIC closed seven banks. Last week they closed 5. The week before that was 3. Seems like they have run out of patience with underperforming banks (unless your assets are above $100 BB or so :O) ).

The banks closed last night were:

• Founders Bank, Worth, IL — FDIC 18390. Acquring Bank: The PrivateBank and Trust Company, Chicago, IL
• Millennium State Bank of Texas, Dallas, TX — FDIC 57667. Acquiring Bank: State Bank of Texas, Irving, TX
• First National Bank of Danville, Danville, IL — FDIC 3644. Acquiring Bank: First Financial Bank, National Association, Terre Haute, IN
• Elizabeth State Bank, Elizabeth, IL — FDIC 9262. Acquiring Bank: Galena State Bank and Trust Company, Galena, IL
• Rock River Bank Oregon IL 15302. Acquiring Bank: The Harvard State Bank, Harvard, IL
• First State Bank of Winchester, Winchester, IL — FDIC 11710. Acquiring Bank: The First National Bank of Beardstown, Beardstown, IL
• John Warner Bank, Clinton, IL — FDIC 12093. Acquiring Bank: State Bank of Lincoln, Lincoln, IL

Since the FDIC found buyers for all of the closures there will be no interruption in service for the customers of the closed banks. If you had CDs though, keep in eye on your mail. The acquiring bank often takes the opportunity to lower your rate. If you get such a notice, you can close your CD without penalty.

Have a great 4th of July. May Freedom Ring.
cd :O)

President Obama signs bill to increase FDIC coverage

President Obama Signs Bill – $250,000 FDIC Coverage Through 2013

President Obama signed the bill yesterday to extend the $250,000 FDIC coverage through 12/31/2013. Here is a link to the FDIC annoucement.

This will help, but it really should have been made permanent. This still makes you have to make sure your funds are maturing in the right timeframes.

cd :O)

Congress and Senate Pass Bill To Extend FDIC Insurance Limits

The US Congress and Senate passed legislation to extend the $250,000 FDIC insurance limit through 2013. We have been watching for this and saw it reported in the WSJ today. It won’t be law until President Obama signs the bill. His signature is expected in the next few days.

This will help many banks who would face losing deposits as the current deadline loomed. Many of our clients had already allowed CDs to mature and be transferred elsewhere over the last couple of months in order to keep their deposits under the original $100,000 limit.

As long as the extension is signed, the extra 4-years will be very helpful, especially for personal investors utilizing POD (Payable-On-Death) / ITF (In-Trust-For) accounts or Revocable Trusts. Who knows, maybe as the health of the banking sector improves, they’ll make it permanent.

We will send out a post as soon as we know President Obama has signed the extension.

cd :O)

Discover Bank Promo

Discover Bank CD rates update: Aug. 18, 2009. The rates are also good for IRAs. They are offering 1Y at 2.00%, 18mo at 2.15% , 2-Year at 2.30%, 3-year at 2.75%, and 5Y at 3.25%.

Here is the link for the regular CDs: Regular CD Pageand
IRA CDs: IRA CD Page

Discover Bank is FDIC insured and their FDIC# is 5649. The rating system we use gives them 5-stars so even if the rate is lower than some other banks, they look like they will be around for a while. According to the data from the FDIC for March 2009, they have lost $69MM. They earned about $600MM for 2008. As of March, they do have about $5BB in capital, so it would seem they will be okay.

IRA CDs are insured up to $250,000 and through 12/31/09 regular CDs are insured up to the same. The rumor mill is whispering that regular CDs will have the 12/31/09 extended, but not made entirely permanent. Of course, that is just a rumor.

Have a great Day
cd :O)

First Star Credit Union – A scam

One of our clients alerted us that First Star Credit Union may be advertising for deposits. This institution is not federally insured by the NCUA or privately by ASI. I found a newstory in the LA Times that reported they have been operating a Loan scam. I also found a Ripoff Report on the same thing.

Please, Please always verify that the bank you are considering making a deposit with is FDIC insured or if it is a credit union, that they are NCUA insured.

Jumbo CD Investments, Inc.
cd :O)

Millennium Bank in Caribbean: Ponzi Scheme Shut down by SEC

I first saw this last night (burning the midnight oil for you :O) ) on bankdeals.

Many of our readers and visitors over the years have asked about Millennium Bank and I have always urged great caution. It is alledged that “only” $68 Million is in question. Although that pales in comparison to the Allen Stanford and Bernie Madoff fiascos, real people have been hurt. The question begs, why did it take so long? Certainly, questions have surround this bank for a number of years.

The old adage of “if it is too good to be true…” certainly came into play here. If you are investing in CDs because of their safety and guarantee, then stick with FDIC insured banks and NCUA insured credit unions. If your looking for higher rates of return, then look to the markets. It is just too risky, otherwise.

Bloomberg also has a story on this.

Also, please don’t confuse this Millennium Bank with any of the FDIC insured ones that reside here in the states. The following are FDIC insured banks:

• Millennium BCP Bank, NA (35280)-Newark, NJ
• Millennium Bank, NA (35096)-Reston, VA
• Millennium Bank (57175)-Edwards, CO
• New Millennium Bank (35151)-New Brunswick, NJ

Thoughts on AIG

I would encourage everyone to read the linked article. Michael Lewis lays it out and provides us insight into why we should fear the Gov’t being able to modify contracts. I’m as outraged as the next person, but the problem is not the bonuses. The problem is allowing a company to continue way past its expiration date. Let me know what you think of the article.

Mass Hysteria Over AIG Obscures Simple Truths: Michael Lewis

Looking for the best CD Rates – Introducing MoneyAisle

While searching for the best rates for you guys, I came across MoneyAisle awhile back. After some talks back and forth I felt comfortable with their service. You’ve probably seen their ad on our rates page. They offered to write an introduction piece for us, their blogger, Kevin Cafferty, provide the below information. They have competitive rates. I ran an auction today and a 2.50% APY was the top rate. That is in the top 10 rates that we are seeing. So enough of me, here is Kevin. Please leave any questions in the comments, I’m sure we can get Kevin to come over and respond.

Looking for the best CD Rates?
Recent market volatility has made safe investments like certificates of deposit more attractive to consumers looking to get a steady return on their savings. Rates between different financial institutions may vary to the point where it’s difficult to find out if you’re getting the most out of your cash.

The Solution: MoneyAisle
MoneyAisle takes guesswork and time-consuming comparison shopping out of the equation by providing you with great rates, free of charge. Over 100 banks in the MoneyAisle network all want to acquire you as a depositor and are willing to bid against each other in a live instant auction for that privilege.

Here’s how it works: you enter the terms of your CD (deposit amount and duration) into MoneyAisle and then watch the banks battle it out in a live automated auction – the winning rate at the end of the auction is the highest rate available in MoneyAisle’s system at that time. You’ll be presented with comparison rates on a national and state level to give you a sense of what your return will be and you’ll be provided with information on the bank.

It’s free, and you don’t have to commit until you’ve gone over all the information. The entire auction process only takes a few minutes, every bank in the network is a member of the FDIC, and the banks have been further pre-screened using an independent bank rating agency for additional consumer protection (banks rated in danger of failing are not in the network.)

Northeast Community Bank — 1Y at 2.79% APY

Okay, a true freebie for you. My last attempt didn’t fare so well, so no strings attached. The CD Rates are decent.

Northeast Community Bank — FDIC# 29147.
1-year CD at 2.79% APY
18-month CD at 3.05% APY

Their stats look healthy and the rating system we use gives them 5-stars.

They need a copy of your driver’s license and a second form of ID sent in the mail after the on-line process is completed.

Visit their website. Click the open Your NECB account link. The rate isn’t locked in, until they receive the funds.

Let me know how it goes. I also came across this site with some good money advice.

cd :O)