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Bank vs. CU CDs
Old 06-14-2006, 06:42 AM   #1
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Bank vs. CU CDs

Interesting discussion on fatwallet. It would appear that CU CD's (share accounts) do not have to guarantee returns - that in fact if they do not turn a profit, can pay out other than a stated rate.

Anyone run across this before?

If this is true then a CU CD would make a poor choice for a fixed income investment.
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Re: Bank vs. CU CDs
Old 06-14-2006, 07:04 AM   #2
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Re: Bank vs. CU CDs

Link?

I suspect that even though they technically have the right to do so, CUs never would unless they were heading into BK. If a depository institution reneged on promised interest rates, they would be toast as nobody would do business with them.
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Re: Bank vs. CU CDs
Old 06-14-2006, 07:23 AM   #3
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Re: Bank vs. CU CDs

I think I have answered my own question. The info that was being quoted appears to be for MM - savings - etc. Accounts that are normally variable.

I do have another concern that came up - it appears that the CU insurance may only pay principle in case of failure but FDIC includes interest. Don't know for sure yet.

I will continue to monitor this as CU rates are becoming very attractive. The last AFCU rate was 6.5% for 5 years - hard to beat (unless inflation sets in then all bets are off)

Brewer - I'm not sure how to do a short link to use http://www.fatwallet.com/c/52/ and then go to the last page in the CD thread.
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Re: Bank vs. CU CDs
Old 06-14-2006, 07:27 AM   #4
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Re: Bank vs. CU CDs

FDIC also only insures principal, not interest.
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Re: Bank vs. CU CDs
Old 06-14-2006, 11:05 AM   #5
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Re: Bank vs. CU CDs

Quote:
Originally Posted by brewer12345
FDIC also only insures principal, not interest.
I thought FDIC insures all your money (principal and earned interest) in the account upto $100k at the time of a bank default.
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Re: Bank vs. CU CDs
Old 06-14-2006, 11:10 AM   #6
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Re: Bank vs. CU CDs

Quote:
Originally Posted by vagabond
I thought FDIC insures all your money (principal and earned interest) in the account upto $100k at the time of a bank default.
From the FDIC website:

"FDIC deposit insurance covers the balance of each depositorís account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bankís closing."


http://www.fdic.gov/deposit/deposits...ed/basics.html
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Re: Bank vs. CU CDs
Old 06-14-2006, 11:32 AM   #7
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Re: Bank vs. CU CDs

REW beat me to it. I stand corrected. I was always under the impression that it was principal only.
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Re: Bank vs. CU CDs
Old 06-14-2006, 11:36 AM   #8
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Re: Bank vs. CU CDs

Attention moderators: It looks like someone has hacked into brewer's account.

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Re: Bank vs. CU CDs
Old 06-14-2006, 12:23 PM   #9
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Re: Bank vs. CU CDs

Thanks.
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Re: Bank vs. CU CDs
Old 06-14-2006, 01:28 PM   #10
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Re: Bank vs. CU CDs

Don't forget that Credit Unions are insured through NCUA or their own insurance.

http://www.ncua.gov/

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