Multiple Banks

CDsaver | Dec 3, 2018 | 5 posts since 2018

How do you address FDIC coverage for a large sum of money? Several online bank accounts and a couple of local branches?

I've never used online banking, only face to face.

Would like to get all money into 2% savings accounts until time to figure a longterm CD ladder plan and/or annuity.

I recently lost my business due to health reasons. My salary and savings contributions have ceased. I need to generate income from my savings.

And advice or recommendations would be greatly appreciated.

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Answers

FrankSavage | Dec 9, 2018 | 45 posts since 2017

If you haven't already done so, you may want to become familiar with how FDIC operates. Lots of interesting and useful information here: https://www.fdic.gov/deposit/. You will also find an Electronic Deposit Insurance Estimator that will help you understand how much of your deposits are actually insured. Good luck.

OAG | Dec 9, 2018 | 23 posts since 2010

Add multiple beneficiaries to the account (coupled with POD to bypass Probate on the account). 2 beneficiaries raised insured level to $500K, 3 to $750K, etc. Of course this assumes FDIC or NCUA insured accounts.

liaf57 | Dec 9, 2018 | 1 posts since 2018

Another option is opening up a brokerage account with Fidelity, Vanguard or Schwab. They sell brokered cd"s which are somewhat different than bank cd's. Brokered cd's are bought by the brokerage house from banks and generally have a slightly higher rate of return. Difference is if you cash it in early a Bank cd you lose a certain amount of interest( say 6 months) whereas the brokered cd must be sold on the secondary market(just like a bond).If interest rates go up you would sell the cd for less than you paid for it and if they have gone down you sell it for more than you bought it. They buy from different banks so you have FDIC coverage from different banks. Right now 10yr cds are 3.65%, 5 yr are 3.55% , 3yr are 3.25% and 2 yr are 3.00%. You can buy a money fund paying 2.15% until you decide how you want to ladder your cd's. I have a schwab account and I like getting everything on one statement and getting FDIC insurance from several different banks. Some people do not like brokerage cds due to the fact that if you need the money you have to sell it early and sometimes the secondary market for them can be rather illiquid.

CDsaver | Dec 9, 2018 | 5 posts since 2018

Thanks the three of you for the kind and helpful replies above.

I will implement your advice. However I don't now or understand the things to consider before locking into a 5 and 10 years CD. Guess it's speculation. I can see myself waiting for a higher rate and end up with rates plummeting.

Maybe locking into a rate that is decent enough to cover some basic expenses makes sense. Something similar to the monthly payment of an annuity.

Diehard | Dec 10, 2018 | 113 posts since 2018

There are many good articles and tutorials about CD investing. I did a Google search to learn. Type in the words "CD ladder." Or, "What is a CD ladder?"

My concern is the extra taxes that all this saving & interest generates. Of course, I'm very thankful to have money to save, but after doing the tax return (and after whatever inflation there is) a lot of my CD & savings interest gets eaten up. I figure I need at least a 4% interest rate to come out (a little bit) ahead. Unless we get higher rates, I'm just treading water.
2.25% is better than nothing. But it's certainly nothing to get excited about.

paoli2 | Jan 5, 2019 | 2,641 posts since 2011

It seems to be a bit scary right now for CDs. I went looking for what was available at our brokerage Friday and they only had ONE institution left and I already have a bunch of that particular one. I checked our other brokerage and it was even worse! I am waiting to see if the lights come back on this Monday. Does anyone know what is going on in the background that DA hasn't found out about yet? Thanks!

Ally6770 | Jan 7, 2019 | 4,294 posts since 2010

Do contact the small regional banks and credit unions near you. I just received a 3.8% interest on a 5 year traditional IRA. 3.4 was the highest offered on their website. I would suggest not to call on a Monday as that is a busy day for everyone.

CDsaver | Jan 7, 2019 | 5 posts since 2018

I called a bank near me and introduced myself as a local resident inquiring about CD rates they might offer for large amount 5 year CD with ladders.

They said tell them in writing exactly the amounts and for which terms regarding a ladder.

I haven't responded yet.

How would you respond regarding $1m at today's rates or should I wait for higher rates?

tck | Jan 1, 2019 | 15 posts since 2016

1. Start today.
Start with banks credit unions you know. Looking at the top savings accounts, there are probably a handful you've heard of: American Express, Barclays, Marcus (Goldman Sachs), Discover, maybe some others like Ally and Synchrony. Join one, or a few, you don't need to deposit much, just get started.

2. Stay organized with your login information.
However you choose to do it, you're going to keep to keep track. You may not be able to keep all of your logins and passwords the same (and of course, most people would not recommend you do that anyway).

3. Establish a Hub Account.
This account should have high daily and monthly ACH (electronic transfer) limits, which will allow you to more efficiently move money. Read more here: https://www.depositaccounts.com/blog/best-internet-banks-to-use-as-your-hub-account.html

Doing this will at least make you more agile for when you are ready to move on a certain financial product.

Mountain2018 | Jan 1, 2019 | 1 posts since 2018

Thank you, and luckily Ally is mentioned as a good hub account, which I chose already thanks to recommendations here.

As well reminding about password and login organization which could be an issue. Probably I'll make a written copy of this for safe keeping in the event of an unexpected problem.

Thanks everyone and Happy New Year.

newbie1 | Jan 7, 2019 | 24 posts since 2010

Also be aware opening too many accounts may disqualify you from opening a new account at institutions which use Chexsystems. I was refused an account at a local bank as I had five inquiries on my Chexsystems record. Do a search for “which Banks use Chexsystems”.

CDsaver | Jan 7, 2019 | 5 posts since 2018

Those hidden obstacles... thanks for sharing this experience, hopefully I'll avoid this thanks to you.

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