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 Dear
Dr. Don,
With all the mortgage secondary market troubles, are my
CD and money-market savings at institutions like IndyMac, Countrywide, etc. safe?
These institutions offer the best rates for savings, yet they are also most aggressive
at producing mortgage loans. They are hurting.
What about my savings at these institutions? Do I
need to worry and move my savings to bigger banks, which offer worse saving rates
in general?
-- Greg Golden  Dear
Greg,
A Federal Deposit Insurance Corporation, or FDIC, insured deposit
is backed by the full faith and credit of the United States government. And the
National Credit Union Share Insurance Fund, or NCUSIF, are insured funds held
at a credit union. If your money is held as an insured deposit you can feel confident
about seeking out the highest yields at a bank or credit union.
Knowing
the limits of FDIC and NCUSIF insurance is important. The federal government has
raised the ceiling on insured deposits for some retirement accounts but not for
nonretirement accounts. Here's what the FDIC publication, "Your
Insured Deposit," says about the change: If
a depositor's accounts at one FDIC-insured bank or savings association total $100,000
or less, the deposits are fully insured. A depositor can have more than $100,000
at one insured bank or savings association and still be fully insured provided
the accounts meet certain requirements. In addition, federal law provides for
insurance coverage of up to $250,000 for certain retirement accounts. The
increased insurance limit for certain retirement accounts also applies to NCUSIF
insured funds. You can compare
rates for the highest yields on deposit accounts at Bankrate. The search results
will also provide you with Bankrate's Safe
& Sound bank safety ratings. If two banks offer
the same yield, then it makes sense to go with the one with the higher safety
rating. But don't forget that there's more to banking than a high yield. Convenience
and cost are two other factors that spring to mind. Picking up an extra .01 percent
on $10,000 gets you an extra $1 per year. A couple of stamps negate most
of that increase. | 
