Dedicated to Deposits: Deals, Data, and Discussion

4.00% 8-Month Add-On CD at WaMu

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Washington Mutual is offering a special 4.00% APY 8-month Add-On CD. A WaMu checking account and new money are required. The minimum deposit is $1,000. The add-on feature allows you to make additional deposits up to the amount of the intial balance during the term (add-on deposit does not have to be new money). This doesn't seem to be listed at WaMu.com. It was advertised today in several papers. Here's an online ad from the Dallas Morning News.

I just called the number in the ad (1-866-808-1396), and I was told it's only available in certain states. It seems to be only available in states with WaMu branches. This includes AZ, CA, CO, CT, FL, GA, ID, IL, NV, NJ, NY, OR, TX, UT and WA.

The CSR did say it could be opened by phone. They have to receive your deposit by check or wire transfer within 7 calendar days to guarantee the rate.

For those who can't open this CD by phone, WaMu has a 4.00% APY 6-month Online CD. For those looking for a long term CD, they have a very competitive 60-month online CD with a yield of 4.25% APY.

For the Add-On CD special, the checking requirement isn't that bad since you should be able to choose their free checking which has no monthly fees and provides free checks and wire transfers. Plus, once you have the checking, you're qualified for their online savings account which currently has a yield of 4.00% APY with no minimum balance requirements.

For those in Texas, Georgia and Illinois, WaMu is still offering 6.50% APY on its Savings for Success account (5.50% APY for those in Washington State). This program limits the amount you can put into this account to $500 monthly automatic transfers for a one year period. It also requires a checking account. Please see my review of this program for more details.

Be sure keep your deposits under the FDIC limits (see post). I recommend this for any bank, but WaMu has again been making news related to mortgage losses (see Reuters article).

Bank deposits at WaMu are FDIC insured under two banks (Washington Mutual Bank FSB and Washington Mutual Bank).
  Tags: New York, California, Washington, Georgia, Utah, Texas, Nevada, Illinois, Oregon, Idaho, Arizona, Colorado, CD rates, New Jersey, Connecticut, Florida

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Comments
32 comments.
Comment #1 by Anonymous posted on
Anonymous
Don't put funds in Washington Mutual.

Bank will be the first large S+L failure in the United States. It is definitely heading for default.

The rates also are not that high at all.

I recommend completely against any usage of WaMU for banking.

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Comment #2 by don't tase me bro (anonymous) posted on
don't tase me bro
WaMu is perfectly fine to place your money as long as you stay at the FDIC limits. If the bank fails you will get your money back quite quickly. There are banks in much worse shape than WaMu. And there is a good shot that if WaMu fails, it will be taken over by another bank the way Countrywide was.

WaMu has a lot of deposits.

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Comment #3 by Anonymous posted on
Anonymous
Not true at all. WaMU is the largest Savings and Loan in the United States.

FDIC insurance may not have enough insurance to cover should WaMU fail because of its size and scope. Even Citibank is unable to attract new cash inflows. If WaMU AND Citibank collapse, there will definitely not be enough FDIC insurance to cover depositors.

I would HIGHLY recommend against putting funds into WaMU. With the bank losing big funds, they will do everything in their power to make the depositors keep their funds with them while trying to use those funds in any way possible to garner profit for the bank such as fees, long fund hold times, and everything inbetween. When a bank gets beaten down hard, they will push harder to turn those unprofitable customers into profit which means the consumer gets ****ed in the end.

WaMU is a bank to avoid at all costs.

If you take a bank such as HSBC, they are profitable in many markets and are appointing a new board of directors with the likes of the CEO of Infosys. Credibility is top notch as well as its profit margins.

Citibank is also a shaky bank I would avoid right now as well.

We have not seen the likes of the banking system like this in many years now so people will be VERY surprised when FDIC insurance does not have enough to cover large bank failures but it is very probable this will indeed happen.

WaMU should be avoided.

Not all banks are in shaky grounds. HSBC is a large bank with a higher interest rate for online savings which is stable. There are also plenty of banks which are stable as well. But I can tell you that WaMU is a very unstable bank right now and should be avoided.

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Comment #4 by Anonymous posted on
Anonymous
The wise ones will understand the banking system and have taken economics courses in college and would understand the total whole of where they put money in.

Do your own homework here, because if a bank does fail and FDIC insurance can not cover your losses, you are out your 100k AND some if you went above deposit limits. Don't take a bank for granted in that they are in your interests and are steady and stable.

Just like those folks who I hear in the streets say they had a foreclosed home. If they understood the system they wouldn't have been in those foreclosed homes to begin with.

Caveat emptor

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Comment #5 by Anonymous posted on
Anonymous
If the FDIC cannot cover its liabilities, then no bank is safe. Maybe you're trying to trigger an old-fashion bank run.

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Comment #6 by Anonymous posted on
Anonymous
Please...if your deposits are in a FDIC insured bank your deposits are safe and covered as long as they meet all criteria of FDIC insurance. Anybody who says otherwise doen't know what they are talking about.

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Comment #7 by Anonymous posted on
Anonymous
Do you even understand how FDIC insurance is funded? Study up on this and debate facts rather than making a blanket statement that all banks will be covered by FDIC insurance. With the first time of major bank collapses happening, the FDIC insurance program will seem meaningless when it is all said and done.

Note: The FDIC never identifies institutions on its problem list because it doesn't want to cause a run on the banks.

WaMU is the largest Savings and Loan on the PROBLEM LIST bar none. And it will only exacerbate further.

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Comment #8 by Anonymous posted on
Anonymous
I agree with the 1st comment here about staying away from WAMU altho for a different reason. My problem started when I wanted to cash in my cd's at maturity. You can't do it by internet as they require notice by phone. They have a menu for everything except cashing in a cd so you get to guess which one to try. Get the wrong one and you will get to start over as they will cut you off when they say they are transfering you. Took me about 40 minutes on the phone to get someone who could handle this transaction. I called the day before maturity and they would't accept instructions. Has to be on or after maturity date. SO I had to go thru the same ordeal the next day. When I finally got the correct department on the correct day the person I was talking to could not handle the closing of a cd and would have to transfer me. And I bet you guessed it, got cut off again. I could go on and on but you have the picture by now that they don't want you to take the money. You can't get the money by transfer as it has to be by check. Check takes 5 to 7 business days and don't plan on spending it on the 5th day. Wamu is a roach motel for money. If you want to look at a shakey firm look at countrywide. They are under FBI investigation. I never have and still don't think the merger with BAC will happen. I think the BAC offer was valued at $7.00 or higher per share. CFC stock is trading at $4.75. The smart money knows something. If you were a BAC stockholder would you vote for the merger. I have rambled on long enough and the mail man just got here so need to see if my last check from WAMU is here.

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Comment #9 by Anonymous posted on
Anonymous
No its not a different reason.

It goes along with what I said about the bank trying to keep the depositors funds.

I know SEVERAL people who have had this experience with WaMU CDs now. This was one of those things in my head when I mentioned this. But again these tactics are all predictable and include a wide array of tactics, they will not be isolated to just single incidents like this.

At any rate WaMU will never see a cent of my money.

As far as Countrywide goes, this needs to be monitored very carefully. The Bank Of America deal does look like it will indeed commence. I still remember the deal between Bank Of America and MBNA between Bruce Hammonds and Ken Lewis. A helicopter incident almost killed the deal at the time.

In the case of Countrywide AND Bank Of America, the two are both large Home Loan servicers which offer similarly horrendous Loan offers and pricing. If the government allows the deal it will go through in most likelyhood. Bad pricing but good returns for depositors at Countrywide.

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Comment #10 by Anonymous posted on
Anonymous
Our online banking system is currently experiencing technical difficulties. Please visit us again after 9:00 AM Pacific Time. We apologize for the inconvenience.

Countrywide website down. Coincidence? I dunno. They are under FBI investigation after all.

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Comment #11 by Don't Tase Me Bro (anonymous) posted on
Don't Tase Me Bro
Wow! What nonsense about the FDIC not having enough to cover a WaMu failure. This is utter nonsense! The U.S. Government is behind the FDIC. The FDIC is not a private company. The FDIC cannot run out of money unless the U.S. Government runs out of money. The U.S. Government can print more money (yes, I know this will cause more inflation). If the FDIC and the Federal Government were unable to pay, we'd be back to a Great Depression. And then it would be disaster of epic proportions.

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Comment #12 by Anonymous posted on
Anonymous
Kane, Edward J. 2001. Dynamic Inconsistency of Capital Forbearance: Long-Run vs.
Short-Run Effects of Too-Big-to-Fail Policymaking. Pacific-Basin Finance Journal 9,
no. 4:281–99.
This paper begins by reviewing the costs and benefits that fully informed creditors would
consider in deciding whether to recapitalize or liquidate an insolvent corporation. It goes
on to identify the additional concerns and conflicts of interest that incompletely informed
taxpayers face when short-horizoned government regulators manage the insolvency of
giant banks. Regulatory decisions may exhibit dynamic inconsistency because
opportunistic forbearance offers personal and bureaucratic rewards and officials who
confront bank insolvency in a timely way are threatened with substantial reputational and
career penalties. However, the model also indicates that dynamically inconsistent capital
forbearance could emerge because current taxpayers believe they can shift the costs of
resolving bank insolvencies to future taxpayers. (© 2001 EconLit)
Kaufman, George G. 2002. Too Big to Fail in Banking: What Remains? Quarterly Review of
Economics and Finance 42 no. 3:423–36.
This paper traces the history and evolution of the too-big-to-fail policy in banking.
Following that, the author presents a proposal for resolving the failures of large, complex
banks—a proposal that avoids unduly disrupting financial markets or significantly
reducing the potential market discipline exerted by large off-balance-sheet creditors
(primarily swap counterparties). Specifically, the proposal calls for all swap
counterparties to large banks to enter into a master contract with the FDIC providing that,
if the insured counterparty bank fails, they will be assessed a pro rata share of the loss.
This arrangement would be expected to (1) reduce the probability that a large-bank
failure would have extreme adverse effects on the economy, and (2) avoid the economic
need to use resolution techniques very different from those normally used in resolving the
failures of smaller banks.
Kaufman, George G., and Steven A. Seelig. 2002. Post Resolution Treatment of Depositors at
Failed Banks: Implications for the Severity of Banking Crises, Systemic Risk, and Too Big to
Fail. Federal Reserve Bank of Chicago Economic Perspectives 26:27–41.
This article begins by describing the scenerios that could result in losses to depositors in
bank failures and policies that could help reduce these losses. The authors outline current
FDIC procedures and analyze the pros and cons of the “full and immediate access” that
depositors have to their claims. The authors then develop a model to find the optimal
delay time, and conclude by recommending best practices for depositor access to funds in
failed banks.

1
Comment #13 by Anonymous posted on
Anonymous
some people are rather paranoid it seems, a bit too much in my opinion...

and cashing out a CD from WaMu is not as hard as another commenter has said it would be... basically, within the phone menus, choose the one that says something about "renewing your cd" and you'll get a rep to talk to, who closed my 12-month CD in literally 3 min. after verifying my identity... plus it says in the e-mail WaMu sends you before the maturity date that you need to call the toll-free number AFTER maturity to cash out... come on, a high school kid can do this

1
Comment #14 by Anonymous posted on
Anonymous
FDIC has power to appropriate all of the assets of failing Bank including real estate. WaMu has $500 billions in real estate holdings across the nation. Not likely to go out of business.

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Comment #15 by Anonymous posted on
Anonymous
How to cash out a WaMu CD is spelled out in the account agreement when a person first invests in the CD. You know what to expect at muturity.

A phone call isn't that hard. Besides some other banks will not even accept a phone call, they require a written letter to close out a CD. Flag Star Bank is one of them. But still it is stated up front upon opening a CD with them.

As far as FDIC insurance goes, I have not read anywhere where they stated that they would cover depositors in a failed banking institution only if they have enough money to do so.

I also believe paranoia is setting in with some over anxious people.

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Comment #16 by Anonymous posted on
Anonymous
Certainly, the deposit insurance funds face larger potential losses from the failure
of a single large, consolidated institution. Insurance is based on the concept of
diversifying risk. If an institution gets too large relative to the industry as a whole, it
becomes increasingly difficult to diversify risk. Larger institutions also are more
complex and tend to be involved in more nontraditional activities. Large banks pose
more challenges when they fail, and the failure of a very large bank has the potential for
creating systemic risk, although measures enacted in FDICIA, though as yet untested,
were designed to improve the ability of the government to handle situations involving
systemic risk. The unprecedented failures of a number of very large financial institutions
simultaneously would be more problematic, but it is questionable whether it would be
appropriate to maintain insurance funds that are large enough to address an absolute
worst-case scenario.

As noted: In a worst case senario, the FDIC due to multiple failures will not be large enough to address a worst-case scenario.

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Comment #17 by Don't Tase Me Bro (anonymous) posted on
Don't Tase Me Bro
So, you are implying that should the FDIC not have enough money on their books to pay out on a failed bank or banks, the U.S. Government will just let the FDIC go under?

Of course not. The U.S. Government IS the FDIC. They would not want public confidence in the FDIC decimated, which is what would happen if the FDIC failed to pay out.

The U.S. Government WILL pay on all insured accounts should banks go under, unless the U.S. Government was bankrupt.

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Comment #18 by Anonymous posted on
Anonymous
To all of you who think that FDIC will default, STOP WASTING TIME.

SS and Medicare will default first, before FDIC is not going to pay to depositors.

FDIC is the image of USA across the Globe. FDIC refusal to pay will, trigger world wide panic.

Who ever thinks of FDIC failure, get life.......

1
Comment #19 by Anonymous posted on
Anonymous
This is from Mr. Paranoid, you know, the high school dropout to the poster 9:52 who is the CD closing expert. You are correct that they say you must call within 10 days after maturity but it does not say you cannot give instructions before the maturity date. I guess I missed the instructions on how to use the menu that said you should select the menu opposite of what you want to do so if you want to close a cd you would select the menu for renewing a cd. Think the menu was designed by a high school dropout or a Harvard grad. At least you could admit they don't want to make it easy to close out a cd .

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Comment #20 by baban (anonymous) posted on
baban
Today I read about WAMU ratings on bankrate.com as well as reviews on BBB.com, epinions.com. The bank has poor rating (4) for reliability and so many horrific experiences from prople all aroud the US.
Man...I am going to withdraw my hard earnrd money from the online savings ASAP. At lease I will be able to get a sound sleep at night.

Good luck investors at WAMU...

-Baban
Dallas, TX

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Comment #21 by Running For POTUS (anonymous) posted on
Running For POTUS
The U.S. Government is spending twelve billion dollars per month, yes per month, to finance the Iraq war.

If the U.S. Government can afford to spend twelve billion dollars per month to fund the Iraq war, they have enough money to cover the FDIC's payout of a major bank like WaMu.

1
Comment #22 by Anonymous posted on
Anonymous
while your money is safe at WaMu once everything is set up, the overall experience is terrible. i sent in money for their 5.1% 7-month add-on CD 7 weeks ago, and WaMu has yet to open my account. For two weeks they couldn't even find my money even though they cashed the check. While I think they have now located the cash, the account still isn't set up, which is worrisome based on the large amount that is floating around. based on this alone i would not put another dollar in wamu.

1
Comment #23 by Anonymous posted on
Anonymous
I used to think we were spending a lot on the war in Iraq. Then I found out it is $12 billion per month. That is $144 billion per year. The govt is about to spend more than $150 billion on the one time economic stimulus package. More than an entire years spending in Iraq for maybe $600 per person benefit. Based on $600 per person for the stimulus package that comes to about $50 per month per person for the war in Iraq. Not really a lot of $$$.

1
Comment #24 by Anonymous posted on
Anonymous
I was getting ready to put in $70k in the add-on CD offer for 8 months. However, after reading these comments I am reconsidering. Banking guy, can you provide some direction?

1
Comment #25 by Anonymous posted on
Anonymous
WaMU is heading for bankruptcy IMHO.

1
Comment #26 by Anonymous posted on
Anonymous
WaMU debt has now been downgraded to above junk bond status.

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Comment #27 by Anonymous posted on
Anonymous
http://biz.yahoo.com/ap/080314/washington_mutual_rating.html?.v=1

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Comment #28 by Anonymous posted on
Anonymous
One factor that is being ignored here is the bad customer service this financial institution provides. So, in the event there is a default, customers are going to have a heck of a time trying to get their money due to their sub-standard customer service. Even if it is covered by FDIC, depositors will be subject to a lengthy bureaucratic process at the hands of the bank’s personnel. The slightly higher rate being paid on deposits do not warrant the headache when one tries to get their money out. Be prepared for a difficult withdrawal process.

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Comment #29 by Anonymous posted on
Anonymous
That's ridiculous. Here's what happens when a bank fails:
One day it's open and not doing well. The next business day, it opens under FDIC receivership; another bank steps up and takes insured deposits -- generally seamlessly.

As long as you're under the insurance limits, there's hardly anything to worry about.... unless you're one of these paranoid folks who thinks that the FDIC is going to go belly-up.

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Comment #30 by Anonymous posted on
Anonymous
A bank "failing" by FDIC standards doesn't mean it has no money whatsoever to pay out deposits. FDIC steps in way earlier when it feels the bank has no hope of improving. At that point, the bank still has significant amounts of cash to cover their deposits. Any shortfall is covered from FDIC funds, which are for all intents and purposes (for those keeping under $100k in their accounts) are limitless.

If the silly doom and gloom scenario of banks failing and FDIC not covering happens we'll have much larger things to worry about, such as finding food and antibiotics, massive looting, riots, etc. Your deposits will be worthless due to a certain hyperinflation, even if they are placed in safest institutions.

So cut the fear-mongering..

I lived through NetBank failure and if I didn't read financial headlines I would never have noticed it happened until they sent me a letter a week later.

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Comment #31 by Anonymous posted on
Anonymous
I reiterate my comment regarding the poor customer service at WAMU. It doesn't matter if it is under FDIC receivership, it is the same people behind the desks. Get it.! They will make it as difficult as possible for those wanting to get their money out. FDIC or no FDIC.
I would rather get 3.75% elsewhere than get harassed by their so called "customer service reps"

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Comment #32 by disappointed with WaMu (anonymous) posted on
disappointed with WaMu
Be very careful about putting money at WaMu (Washington Mutual). Wamu doesn't make it easy to redeem CDs. The only way to redeem is by calling their phone number. In contrast, other reputable banks allow online redeeming of CDs (very easy, very quick process).

When I called Wamu by phone, there was a 15+ minute wait to get transferred to the correct department (another 10 minutes). I was told that I’ll get my check in 5-7 business days. Called again, Wamu said it will be mailed soon. Called after 7 business days, only to be told that the first person made a mistake and the checks were never sent. Another 5-7 business days. When the checks finally arrived it was more than 3 weeks late and mind you, WaMu doesn’t even pay interest for the time that held my money without sending a check.

I have had much better experiences with VirtualBank, Ascencia Bank, Corus Bank, etc that are also rated very well at bankrate.com

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