It is noteworthy that while Ken has maintained GTE Financial's safety rating at "B+", Weiss Research has just downgraded that same financial institution to a rating of "C".
with a 15$ fee. I used my sav acct to addon 20$ to all my CDs.
Not sure CDs count for inactive status but fairly sure sav would.
Checking most probably.
GTE's transactional share savings account, which they call a "Regular Share Account", earns interest on balances of $100 or more. You only need to worry about inactivity issues if if you keep less than $100 in that account.
But along those lines, I have found many do not apply the activity rule while you have a CD.
Of course my point was for savings acct. I ran into problems with Emigrant Direct when I was charged a fee on a savings acct.
They wanted an actual paper check to rebate the fee.
Things may have changed at GTE, but in my notes 10$ fee for inactivity, later changed to 15$ fee. I haven't looked lately.
GTE cannot violate the "laws of physics". Course it's not physics that really is at issue with GTE, but other "laws" equally inviolate. In particular:
GTE cannot remain viable for long as an institution when paying us over 3% on our burgeoning add-on deposits while lending money in a marketplace having near zero interest rates. GTE does not possess any sort of "money machine" which would facilitate accomplishment of that rather prodigious feat. Unless the coronavirus attack mitigates soon, allowing markets to recover, it is only a matter of time before GTE either collapses or issues the dreaded 30 day notice. Frankly I'm surprised they have not done so already.
Some valid points but I’m not in full agreement. There are many credit unions out there that are committed to paying CDs in the 4% range. They are arguably at much higher risk than GTE. GTE has a relatively strong capital base. I don’t think paying 3% or 3.3% on CDs is going to kill them. Even today there are credit unions offering new CDs in the mid to high 2’s. Navy is still offering an IRA add on at 3%. GTE is big on collecting all sorts of fees and people are foolish for paying them but they do. We can only surmise that they would rescind the add on feature if they can no longer manage it. Right now, they seem to be managing it well. And it’s extremely possible that not many people even have an add on CD with them. There’s a very small number of sophisticated CD investors out there and GTE was certainly a relatively unknown name for a long time and probably didn’t attract a lot of interest. Plus, a C rating by the harsh rating Weiss is pretty good in my book.
Let me delineate the things I've done to protect myself, to the extent possible, at GTE.
1. Given that the institution might be just fine (2.2 billion cap), or might go under, I want to make sure all my funds on deposit are covered by NCUA insurance. I've spoken with the NCUA a number of times, and the most frequent answer is that one has to create an 'informal trust' - which, the most common answer I get at NCUA is that one simply needs to name beneficiaries to your accounts, each of which brings $250k in insurance to your total invested. (IRAs are a different story.) However, there is some literature that suggests you need 3 components: 1. You must name beneficiaries. 2. Either in the title of the account itself (I like that option best, but many institutions say they are unable to do it), or in the records of the bank, the acronyms such as 'POD' (payment upon death), "ITF" (in trust for), etc. must be linked to the account (or the beneficiaries), and 3. The beneficiaries named must be 'real people' - or charities recognized by the IRS. The 2nd one seemed sticky to me, and I called GTE some time ago, and was assured that the 2nd criteria was met, as the acronym 'POD" existed in the digitized records of the bank, and were connected to all my beneficiaries/accounts. The last time I checked this with NCUA was on 3/11/20 - and the rep I spoke with said that all that was needed were beneficiaries, since, she said, that implied 'POD" in itself. I've done my best to meet at 3 criteria, so it's as airtight as possible.
Another kind of interesting thing is the aftermath of GTE's management cancelling the add-on feature in September of 2019. With the blowback from customers, as well as Ken Tumin weighing in, they reversed themselves quickly, and re-instituted the feature. (One might note that there was no forewarning of this change - it was done before they notified any customers.) I think there's an argument to be made that their reversion to the original 'contract' implied by the account features means that changing their minds again would be a breach of their commitment. I'm not a lawyer, and I don't know if that would stand up. However, I have it in my records that I spoke with reps in their customer relations department about whether GTE could once again abrogate that feature of the accounts, and the answer I got was an unequivocal 'no.' - i.e., they will not change that again. I understand that doesn't mean that management *won't* do that. I just mean that, for what it's worth, I got documented information from this department (which are not their front line reps, they're more on a supervisor-like level) that was unequivocal, and basically a promise that GTE would not again renege on that feature.
One last thing - while buried in the fine print they say they can change any specials or features at any time, I think that is open to interpretation. Obviously, GTE thought at the time that meant they could change critical features of the account *retroactively.* Again, I'm no lawyer, but I think that phrase can also be interpreted to mean that they can withdraw, change, etc. features of currently *offered* promotions or accounts at any time, which is what most institutions I've dealt with do. Being able to change account features retroactively seems ethically repugnant, and i wonder if it stands up to legal scrutiny. At least the assurances I have from employees that this won't happen again might count for something.
