Dedicated to Deposits: Deals, Data, and Discussion

5.50% Savings Account and 5.65% 12-Month CD at Countrywide - Desperate for Deposits?

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Countrywide Bank just made large increases to its deposit rates. The savingslink account is up to 5.50% APY on balances of $10k and over. The yield of the 12-month CD is up to 5.65% APY with a minimum deposit of $10k. All the shorter terms have yields of 5.50% APY (see rate table). This is the second rate hike in only one week.

For more info on Countrywide's savingslink account, please see my last week's post.

Is this a sign of desperation? From today's Washington Post:
Countrywide Financial announced that it is using an entire $11.5 billion line of credit to ease its way through a severe global credit crunch, an ominous sign of how difficult it has become for the nation's largest mortgage lender to borrow money to fund its loans.

So these recent deposit rate hikes must be an attempt by Countrywide to bring in money. But even with high rates, it's not going to be easy. This LA Times article describes how Californians are rushing to pull money from Countrywide Bank in fear of its instability:
At Countrywide Bank offices, in a scene rare since the U.S. savings-and-loan crisis ended in the early '90s, so many people showed up to take out some or all of their money that in some cases they had to leave their names.

Many people who were withdrawing their money had over the FDIC limits. So this is understandable. The article also quoted the following statement made by Countrywide Bank:
It is very important to remember that Countrywide Bank is well capitalized, with FDIC-insured deposits, and is one of the largest banks in the United States, with assets over $107 billion.

Is it advisable to jump on these Countrywide Bank deals? If you do, make sure to keep under the FDIC insurance limits. This FDIC consumer news article Top 10 FDIC Misconceptions is good to review. The article points out that FDIC pays out insured deposits quickly and in most cases, the FDIC will provide each depositor with a new account at another insured bank. Also, the FDIC is required to pay 100% of all insured deposits including principal and interest.

To review Countrywide Bank's FDIC information, please see their FDIC page.

Thanks to the reader who mentioned these rate updates in the finding deals post.

  Tags: CD rates, IRA rates, savings account

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Comments
11 Comments.
Comment #1 by Anonymous posted on
Anonymous
They won't be seeing any of my money with those low rates!

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Comment #2 by Anonymous posted on
Anonymous
I was going to fund a second CD with Countrywide to bring my inveswtment with them up to the FDIC maximum, but Countrywide's customer service phones are being answered with a recording advising they are experiencing a higher-than-usual call volume, and advises you to call back later.

Also, their online system isn't accepting my login, which was just established a week or so ago so I could have online access to a 3 month CD I just rolled over with Countrywide.

When first establishing the CD with them, they provided excellent customer service. Today, however, it appears they have locked me out from being able to cash out an existing CD or buy a new one.

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Comment #3 by Anonymous posted on
Anonymous
I WAS ABLE TO ACCESS MY SAVINGS LINK ACCOUNT TODAY WITH NO PROBLEM.

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Comment #4 by Anonymous posted on
Anonymous
Following up my post from 10:44AM, persistance paid off. It took several calls, but finally got through to a "we'll return your call in 30 to 51 minutes" message. I left my number, and they called back with 10 minutes.

I am now holding one 3MO CD for $25K with 5.35 APY, and one 12MO CD for $75K with 5.65 APY.

All backed by the full faith and credit of the FDIC... and a Countrywide stock gain of over 12% after the Fed's cut!

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Comment #5 by scott (anonymous) posted on
scott
Yep, The overblown panic is getting us a bonus rate. I have $200k fully insured in the savinglink account and think 5.50% is great. I also had trouble logging in for a few days and then I found out it was because you must check one of the boxes that ask if you want the site to recognize your computer or not

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Comment #6 by Anonymous posted on
Anonymous
Well first I would like to thank Bank Guy for a very helpful web site, BrightStar CU 8 mth CD @ 5.55 apy and Countrywide 7 mth CD @ 5.50 apy.

I was wondering if the accruing intrest is FDIC covered on a 100,000 cd above the initial 100,000 CD ?

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Comment #7 by scott (anonymous) posted on
scott
No, The interest above $100k would not be covered. what I have done in the past is have them send me a monthly check for the interest so you maintain a $100k Balance

1
Comment #8 by Anonymous posted on
Anonymous
Countrywide in the past never notified me of my maturing 2 year CD. They rolled it over and I contacted the CEO and he apologized.

I have a retirement account with about $13,000. over the FDIC insured amount of $100,000. I was informed when I opened the account that retirement accounts were insured to $250,000.

I intend to change the paperwork from one beneficiary to POD with other names added. Hopefully, they will co-operate at the local branch. This would cover the excess funds for the FDIC insurance.

For my piece of mind I will make sure all my accounts are under the insured limit in all institutions. I left Patelco cu because of their lack of insurance with the gov.

Hopefully, this is all premature and things will stablize.

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Comment #9 by Anonymous posted on
Anonymous
If by a "retirement account" you mean an IRA, Keogh, or similar type of account, then what you were told is true. They are insured up to $250,000 per person IN ADDITION to the insurance you have on non-retirement accounts.

You can read about it on the FDIC web site here:
http://tinyurl.com/ogkgu

If you have $113,000 in all of your retirement accounts at Countrywide, you have nothing to worry about.

Please note that adding additional beneficiaries to a retirement account will NOT increase your FDIC coverage.

Adding additional beneficiaries to non-retirement accounts can increase your coverage. But make sure they are qualified beneficiaries. Brothers, sisters, parents, children, and grandchildren are qualified. Grandparents, cousins, uncles, aunts, friends are not qualified.

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Comment #10 by scott (anonymous) posted on
scott
Have a warning for anybody with above $100k in Countrywide. I just found out I had $100k of uninsured funds in my account. When I setup the Savingslink last year it had a place on the application to list Beneficiaries, I understand enough about FDIC coverage to know listing 2 would get me $200k Coverage. Just to be safe I decided to send them a message confirming this. Below is their response. This made me nervous so called. My assumption was when I opened the account the 2 beneficiaries gave me the extra coverage, Wrong. Just listing them only means the money goes to them if I die, You must make sure they are officially titled as ITF or PODs. Very confusing and I complained and CSR agreed that it should be explained on application. My message corrected the issue so would be a good idea for others who are over $100k to verify

Message Dear Valued Customer,

Thank you for banking with Countrywide Bank. Your account has been updated such that the beneficiaries are listed as POD's. For further information regarding FDIC insurance coverage please refer to our website at https://bank.countrywide.com/fdic.aspx?pageID=6.

We appreciate your business
Customer Care Team

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Comment #11 by Banking Guy (anonymous) posted on
Banking Guy
Scott, thanks for the warning. It would be reasonable to assume when you list beneficiaries that they would be included as POD or ITF, but I guess you can't assume this. I wonder how many other banks have it this way.

This is a very good point at any bank or credit union regarding PODs. I'll do a post on this soon.

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