CD Questions

[Gearhead Jim]

We have several CD's, which I like to keep distributed among a mix of banks and credit unions even though we are under the FDIC/NCUA limits.

Generically, is there any safety difference between a bank and a CU, presuming the financial strength data is similar for both?

If things got really bad in the future, any difference between the safety offered by FDIC and NCUA?

Penfed usually offers nice rates during January, is that typical of many institutions or is it random? If a particular month is better, it would be nice to renew/transfer the CD's during that month.

Thanks!

 

[Gearhead Jim]

Nobody !!!

 

[clifp]

I don't know for a fact, but the language backing the NCUA seems to be the same as the FDIC. FDIC is a lot bigger so it presumably has more resource to use before having to ask Uncle Sam for help, but it also has more banks with bigger problems e.g. Citigroup.

 

[kaneohe]

I wouldn't know how to analyze this difference myself but everything I've read suggests that they're very similar. Here's some homework if you're ambitious......unfortunately I didn't recognize any of the sources.
fdic vs ncua - Google Search

 

[Nords]

You might have better luck with those questions over at Bogleheads.org.

Or you might get 100+ responses that don't really answer your question.

 

[kaneohe]

some discussion here: Bogleheads :: View topic - Treasuries vs. CDs: Differences, similarities, and portfolio

not w/o some controversy tho.

 

[Gearhead Jim]

Thanks to both of you for the links. I came away with my previous feelings unchanged- the insurance makes both places very safe, but nothing is perfect.

Historically, it seems that CU's don't fail as often; but if things really went down the drain, the psychology of things might cause the government to be more supportive of banks that CU's. Just a guess that I never want answered, I've got CD's at 3 CU's and one bank.

Finally, is there any tendency for banks or CU's to offer their best CD rates in January or any other month? I know Pedfed is a January favorite, but I haven't tried to build a history on anyone else.

 

[smjsl]

How do you know Penfed has best rates in January? Any links?

I would have thought overall changes in CD rates make monthly changes more of a noise but if there is some tendency to raise rates around certain times, I'd love to know this too.

 

[FinanceDude]

Thanks to both of you for the links. I came away with my previous feelings unchanged- the insurance makes both places very safe, but nothing is perfect.

Historically, it seems that CU's don't fail as often; but if things really went down the drain, the psychology of things might cause the government to be more supportive of banks that CU's. Just a guess that I never want answered, I've got CD's at 3 CU's and one bank.

Finally, is there any tendency for banks or CU's to offer their best CD rates in January or any other month? I know Pedfed is a January favorite, but I haven't tried to build a history on anyone else.

Credit unions often will take chances on customers bigger banks won't. Credit unions will match CD rates from others, I can't find many if any banks to do that..........

My Dad's definition of a bank?: "Someone who won't give you money when you REALLY need it, but is willing to give you all the money you want once you don't really need to borrow money anymore".........

 

[Gearhead Jim]

How do you know Penfed has best rates in January? Any links?

I would have thought overall changes in CD rates make monthly changes more of a noise but if there is some tendency to raise rates around certain times, I'd love to know this too.

I haven't kept any records, but my memory is that Penfed seems to offer CD "Specials" around January. Other members have commented the same, but I don't know if they have kept records either.

 

[JohnDoe]

Typically, CU's, and banks for that matter, will offer better rates if they are in need of deposits or are on a membership drive.

Is your credit union state or federal chartered? Here is some light reading...

National Credit Union Administration (NCUA)

State Credit Union Facts & Figures

 

[Gearhead Jim]

We have CD's at three credit unions, all federally charted. I look up the NCUA financial data and Bauer ratings on any CU under consideration. Similar procedure for banks.

I insist on the federal inurance, but I don't depend on it.