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Smart Things To Do When Dealing With Banks/Cus/Cds [Add-To List]

racecar
  |     |   628 posts since 2014

DA has been a place where people have shared lots of information and good ideas, so let's make this an Add-On thread for people to post their smart (perhaps not obvious) methods, or things they do, when dealing with Banks/CUs and CDs/Savings Accts.

I'll start...

(1)

When you want to open a CD, if possible, instead of just opening the one CD, it's a good idea to split those funds into smaller CDs (w/the same maturity date) instead. The reason is, if you ever need to take an early withdrawal (and you can never predict life), not all Banks/CUs will let you take a partial early withdrawal -- in which case you'd be forced to close the entire CD early -- and pay the penalty on the entire amount of the CD instead of something closer to what you need. Plus, while there are places that currently say they allow partial withdrawals, history has shown that institutions can change their rules and try to enforce those changes, even for CDs opened before the rules change. By splitting your CD into multiple parts it's great "insurance just in case" that doesn't cost you anything but an extra 2 minutes on the phone.

So if you're about to open a CD for $430k, instead of one $430k CD, open up something like three $100k CDs and one $130k one. Your rate of return will be the same, and if an emergency comes up (say you need $76k), you can just close one, and won't be stuck being forced to close the entire $430k -- and pay the penalty on the entire $430k. And not just for Jumbos either. Anything over $30k or so I think is a good idea to split.

(2)

For those who have accounts at a lot of banks/CUs: Just about every place has a "dormant account" fee, and it can be impossible to remember to do a transaction at each of them in the manner and timeframe to satisfy the terms at each one before they start charging you a "dormant account" fee. So an easy alternative: at one of your places, set up automated ACHs into each of the savings accounts of the places you deal with, to send a couple pennies every 6 months. Set it and forget it. No dormant account fees that way, and if you really want your pennies back you can always get them back at any time.

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Feel free to post other good suggestions in dealing with banks/CUs/CDs/Savings Accounts!

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18


bobert456
  |     |   187 posts since 2022
Good Start - also - when the CD matures, if you order it out - check min balance requirements to avoid fees, as with the SHARE account. Although I usually do ACH HUB to take money out, if it is sizeable, it may be good to have a FREE CHECKING ACCOUNT where you can take funds out immediately. Many time things mature on Friday, and does not get move for 3-4 days with LOST INTEREST.
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9
jeepguy
  |     |   1 posts since 2023
I'm a CD newbie that just discovered DA. I think this website is great and having this "Smart Thread"
addendum would help many users. Thanks for the suggestion.
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11
FawnDoberman
  |     |   15 posts since 2010
When opening a CD at a NEW bank or credit union, I maintain a list of QUESTIONS to ask (so I don't overlook anything!) e,g. 1] EWP? 2] partials allowed? 3] easiest way to open a new CD - ACH funds into this new account and then open CD by internal message or phone? 4] at Maturity, internal transfer? 5] must Institution CONSENT for early withdrawal? and so on.

The following probably belongs in another THREAD. Nevertheless, in case this helps, I use iMAC Sonoma 14.0 NUMBERS Spreadsheets:
1] one Spreadsheet for each month e.g. "2023 October Banks" so that I know my exact BANK Balance position - with COLUMNS for Name of Institution (rows in alphabetical order), column for Balance which I update whenever a transaction occurs; Maturity Date for CDs; Rate & APY; Routing & Account Numbers, Dormancy and whatever additional columns are useful..

2] Spreadsheet entitled "2023 Certificate Maturity Schedule" again with a column, chronological order, for Name of Institution, Balance, Maturity Date, EWP and other columns fas needed. As each CD matures, I DELETE the ROW so that only current CDs are listed.

3] For those who need to ESTIMATE TAXES, I maintain a Spreadsheet e.g. "2023 Voucher 4 with Columns" entitled Name, YTD Amount Received, EWP if paid, Date Updated and so on.

4] a Spreadsheet entitled "Banks & Credit Unions" - to save time reading and researching. This is an easy reference when a good rate appears at an unfamiliar bank/credit union. An alphabetical Column for Name of Institution and a column for Notes & Comments (gleaned from DA & YELP) e.g. "Absolute No No but others like it," "Fee hungry" and so on. I am sure the above method could be improved upon. However, it may help. Cheers!
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5
planxy
  |     |   140 posts since 2013
Always ask if you will be whacked with a hard pull just to be able to make deposits. Not a good sign, that applicants to join (the credit union) are distrusted and even if accepted are going to get dinged for their error of being on the deposits side of the credit equation as well as potentially the car/mortgage/credit card loans side. AMEX Chase etc. have declined credit cards with my 800+ score for having had credit pulls when placing excess funds, the very opposite of borrowing.
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6
flygirl56
  |     |   17 posts since 2022
Some places will let you tell them maturity instructions when you first open the CD. I always ask if maturity instructions can be set when opening the CD. If so, my request is that upon maturity, the CD to go into the savings, instead of auto-renewing. That way if I forget to contact them during the short grace period it won't get tied up for another long term. I can always choose to renew if I want once it's been moved to my savings account, but want that choice. But even though I always request it not to auto renew, I still write down the maturity date and call during the grace period in case they make a mistake.
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9
capybara
  |     |   10 posts since 2023
Ok, here's one that shouldn't be necessary, but IS:
VERIFY YOURSELF that the CD was created properly afterwards (after that first month if dividends are posted monthly, or after the end of that quarter if quaterly) to make sure of things like the dividends are staying in the CD to compound, if that's what you requested.

I recently opened up 4 CDs of various lengths at a certain credit union where I requested the dividends to stay in the CD to compound but the agent did it wrong, and for ALL FOUR the dividends were being sucked out into the savings account each month without me even knowing for many months, because I didn't bother to check. After all, CDs are usually set-it-and-forget-it. When I noticed the mistake the credit union had to pull up the recording of the call to verify that (yes) it was their mistake, then it took weeks to get them to run amortization schedules and deposit the right amounts--which turned out not to be quite enough so they then had to deposit more again the following month to get it back to where it should be.

Normally one wouldn't think to check back after making the CD to make sure it was done right, but now I check back religiously after the first month (if posted monthly) or quarter (if quarterly) to make sure.
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7
LongTimeDAFan
  |     |   69 posts since 2022
Yeah, I second this one. I once opened up two IRAs at a credit union, one for my husband and one for me. The CU rec'd both checks in the same envelope, from another credit union. Since the two CUs did all of the work, I trusted that it was done correctly. NOT! They saw the first check and processed it, and didn't see the check for my husband's IRA, so they didn't process it. (!) When I got my first statement (quarterly, of course), I saw that his IRA went "missing", had to call the CU, they "had no record", so I had to have them check the actual physical file, and lo and behold, they found the 2nd check. What a PITA, but they did retro the interest and the opening date. So yeah, NEVER trust the a bank or CU actually did their job. It's a sad state, but it's true.
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6
racecar
  |     |   628 posts since 2014
A Must-Do if you have an IRA CD...

Wherever you have an IRA CD, Open up an IRA Savings Account of the same type as your IRA CD (Traditional, Roth, or both) at Each Place you have an IRA CD.

At some point you're going to want a place to put that IRA money temporarily, like when the IRA CD matures, as IRA money can't go in non-IRA accounts. Unless you plan to do nothing but renew your IRA CDs at the same place forever until you die, you're going to want a place to put those funds temporarily at times, especially when the IRA CD matures.

If you ever want to move your IRA money to another place, the reality is that the funds can't be in "CD" form, but must be readily available, like in an IRA Savings Account. Also, moving IRA funds takes time (usually more than the short grace period). If you don't create a matching (Traditional or Roth) IRA Savings Account at each place you have an IRA CD then you're just asking for headaches later, and your options will be severely limited. (Yes, you can move the funds yourself, allowed only once every 12 months per the IRS, but that brings up other headaches, so the best thing to do to have all options available is to open up an IRA Savings Acct as well, wherever you have an IRA CD).

You can open the IRA Savings Accounts with a $0.00 Zero Balance -- you don't need to put money in them now, they'll simply be "holding places" if needed for when your CD matures. So for instance, if you have a Roth CD at "Bank of Fred", open a Roth Savings Account at Bank of Fred too (with $0.00, that's fine).

But don't wait until the last minute to create those savings accounts. If you didn't create them when you opened your IRA CD, then do it now, during the CD's term, before the maturity date. I never did this myself at first, and boy did I learn my lesson. Now I make sure to always create an IRA Savings Account, of the same type, at every place I have an IRA CD.
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2
Kaight
  |     |   1,192 posts since 2011
Headaches? Hmmmm. Guess I've been fortunate. Generally avoid the custodian to custodian transfer drama. Instead take possession of the IRA funds myself and reinvest wherever I see fit. 60 days? No worries. Heck, for me it's usually all over within a week or less.

Been doing it that way for the last forty years. Believe if you want something done right, do it yourself. So far so good.
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