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Save Better Custodian Bank Lewis & Clark?

mgc6288
  |     |   5 posts since 2020

Please clarify what is going on and the role the health of these institutions play.

Save Better by Raisin is offering MM & savings accounts through different banks but the custodian of said banks is Lewis and Clark Bank?

For example, Save Better has a Ponce Bank MM account with a 3% interest rate as well as a American First Credit Union MM 3.05% account. Both list Lewis and Clark as the Custodian Bank on their Product Terms.

Both Ponce and AFCU have an "A" Health Rating whereas Lewis and Clark has a "B+" Health Rating.

First, at what level is the Health Rating worth avoiding. My personal opinion was anything below an "A-" but is a "B" rating that much worse? "C" ratings?

Second, which institution rating is the one to focus on, the bank advertised (Ponce and AFCU), the custodian bank, or both?

Third, Texas Ratio states the Lewis and Clark has a 0% credit trouble score with $400M in assets. Does this counteract the "B+" rating?

Fourth, if one invests into both the Ponce and AFCU under Save Better, are these FDIC individually up to $250k or in sum because both have the same custodian?

Fifth, if this recession we're entering into gets devastating worse, at what asset amount should one be looking for as well as rating?

Thank you!

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Answers
mgc6288
  |     |   5 posts since 2020
Bump. Please assist.
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midas89
  |     |   996 posts since 2017
mgc6288 … I personally am not concerned with a bank’s health rating. The key is making sure you have FDIC or NCUA insurance on your total balances. Even if you just happen to choose a poorly health-rated bank that fails, the odds are extremely high the FDIC or NCUA will get another bank to assume the accounts. In the unlikely event that fails, they will give all insured depositors their money. And remember, one can get much more than the $250,000 minimum insurance by simply adding beneficiaries.

Now, regarding SaveBetter: With so many bank choices offering even higher rates than what SaveBetter is offering, as of this writing, why even consider SaveBetter at all? I am sure you have considered there are negatives dealing with a middleman company. Sure, there are some positives, but I feel the negatives outweigh them.

I personally want a direct routing number and account number to all the banks I deal with. I don’t mind doing my own ACH transfers directly to my accounts separately, whatever bank I choose to deal with.

This does not mean that one cannot have a successful banking relationship with SaveBetter.

And I realize I am not taking the time to answer all of your specific questions. But just in case my feelings resonate with you which causes you to feel you shouldn’t even bother with a middleman company in the first place, I have decided not to take the time to specifically answer every detail you are asking.
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mgc6288
  |     |   5 posts since 2020
midas89 - Thank you for taking the time to reply! I posted this after already having an account with Save Better as I wasn't aware that the custodian was Lewis and Clark. So please do answer the questions, if even for researching other banks to do business with.

Even though you are correct with regards to your paragraph one, I'd prefer to avoid the situation all together. So please:

First, at what level is the Health Rating worth avoiding. My personal opinion was anything below an "A-" but is a "B" rating that much worse? "C" ratings?

Second, which institution rating is the one to focus on, the bank advertised (Ponce and AFCU), the custodian bank, or both?

Third, Texas Ratio states the Lewis and Clark has a 0% credit trouble score with $400M in assets. Does this counteract the "B+" rating?

Fourth, if one invests into both the Ponce and AFCU under Save Better, are these FDIC individually up to $250k or in sum because both have the same custodian?

Fifth, if this recession we're entering into gets devastating worse, at what asset amount should one be looking for as well as rating?

Thanks again.
Reply
1
midas89
  |     |   996 posts since 2017
You're welcome. I do understand you are already with SaveBetter, and you're sticking with them.

If we ever have an issue with a bank or CU, it is nice we can file a complaint with the CFPB, who will contact the bank on our behalf. And often, banks will respond much faster when CFPB is involved. The fact that your money is pooled with others at the banks you choose, and you are not allowed to deal directly with those banks, the CFPB cannot contact the bank on your behalf regarding a specific account number. The CFPB can contact Save Better, and then you'd have to rely on Save Better to contact the bank.

"Consumer Financial Protection Bureau, a U.S. government agency dedicated to making sure you are treated fairly by banks, lenders and other financial institutions."

Your insurance is per bank. Once your money sits at a specific bank, you are insured up to $250K minimum at that bank. If you have 250K sitting at Ponce and $250K sitting at AFCU, all $500K would be covered by insurance if both banks failed, as one random example

So, Lewis & Clark has custodial bank accounts at all the banks Save Better offers. When you deposit your money, that transfer goes to Lewis & Clark's custodial account which they have at either Ponce or AFCU, per your choosing. So, Lewis & Clark is the custodian of the accounts at the banks you chose, and all the pooled money that goes to each of those accounts. However, you get pass-through insurance from each Ponce & AFCU separately, as if you had your own account with your own account number at that bank.

It doesn't matter what Lewis & Clark is rated, or their assets, or ratio, etc. If you are concerned with ratings, it is only Ponce & AFCU to look at, as these are banks that actually have your money. Lewis & Clark does not have your money. They're only the custodian of your money at Ponce & AFCU. If Lewis & Clark fails, Save Better, Ponce, AFCU, or the FDIC/NCUA will get another bank to assume custodial duties, or Ponce & AFCU will get everyone's money back to them.

You asked what health rating is worth avoiding? I have put money into a bank with a C rating, since that bank was paying higher interest than all the others, and I never ever had any concerns. Yes, I made sure the bank was insured, and I made sure my account was always under the minimum. By the way, that bank did not fail.

I think this reply is too long now, so I will stop now. Hopefully someone else will take over and answer your recession and any other of your questions which I did not address. Good luck!
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mgc6288
  |     |   5 posts since 2020
Wow, this is a solid answer! Thank you!
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