Countrywide CD Rate Update - New 5.65% 6-Month CD
POSTED
ON BY Ken Tumin
Countrywide Bank just increased the yield on its 6-month CD from 5.41% to 5.65% APY. This now matches the yield on the 12-month term. The rates on the 3 and 9 month CD remain the same at 5.35% and 5.45% APY. The long term rates, however, went down by 25 basis points. All CDs with terms longer than 12 months now have a yield of 5.00% APY.
These short term rates continue to be way ahead of the rates offered by most other banks. This started back in August when its credit crunch problems made headlines. Countrywide's release of third quarter earnings today still shows problems. However, they've been able to convince Wall Street that things are turning around. Even though it reported a $1.2 billion loss for the third quarter (its first quarterly loss in 25 years), Countrywide shares are currently trading up 31% today (see CNN Money article).
As I mentioned in my previous post, it seems prudent to stay below the FDIC insurance limits. Note, there are many ways to extend your FDIC coverage over $100K. However, you have to be careful, especially if you use POD's. Please see this post for more info.
For more info on Countrywide's CDs, please refer to this post, and for more info on the savingslink account, please see this post.
To review Countrywide Bank's FDIC information, please see their FDIC page.
These short term rates continue to be way ahead of the rates offered by most other banks. This started back in August when its credit crunch problems made headlines. Countrywide's release of third quarter earnings today still shows problems. However, they've been able to convince Wall Street that things are turning around. Even though it reported a $1.2 billion loss for the third quarter (its first quarterly loss in 25 years), Countrywide shares are currently trading up 31% today (see CNN Money article).
As I mentioned in my previous post, it seems prudent to stay below the FDIC insurance limits. Note, there are many ways to extend your FDIC coverage over $100K. However, you have to be careful, especially if you use POD's. Please see this post for more info.
For more info on Countrywide's CDs, please refer to this post, and for more info on the savingslink account, please see this post.
To review Countrywide Bank's FDIC information, please see their FDIC page.
Which raises another interesting issue. Should banks offering abnormally high interest rates (as a result of bad practices, bad press, or whatever) be required to pay higher FDIC premiums? There is some economic logic to that.
Thoughts?
Yours,
Bozo
Countrywide recently borrowed from Bank of America at a rate of 6.75%, so their borrowing from public is still cheaper than what they can get from other institutions. Normally, borrowing in small amounts from public has admin expense, but since most of these CDs and Money market accounts are administered on-line, the expenses are low.
One thing that I noticed on countrywide's website is there suggestions on beating the FDIC limit of 100k by opening accounts under different names and structures and still being within FDIC insurance. That clearly shows that CFC does see fear in its customers to give it larger deposits despite attractive interests.
Personally, I favor preferred stocks and corporate trusts over CDs as they are liquid and give over 8% interest. Income on some of these is considered qualifies and eligible for 15% tax cap.
could you please explain what is it a 'corporate trust' and how safe it is?
For those involved in the stock market Schwab has an excellent checking account tied to a brokerage account. While it is a seperate account they will automaticly transfer funds between the accounts as needed. I love it.
Not sure if it is available without a brokerage account.
I know because I snagged it 11/1/2007, and the next day it vanished.
CW will honor rate, as of date of online application, for 9 more days.
As long as funding is in their hands no later than the ninth calendar day (not on a weekend) after application you'll get that rate.
Added benefit is that once initial $10K min. funding is received, CW will allow additional funding of same CD for 30 days!