Dear Dr. Don,
In choosing between a bank and a credit union as a place to park my money, is one really any safer over another — a credit union over a bank, or vice versa?
— Concerned Kay
My opinion is that as long as your deposits, or shares for a credit union, are insured, there’s no real reason to be concerned about safety. Insured deposits are backed by the full faith and credit of the United States government — over and above the reserves held by the insurance fund.
An earlier column, “U.S. government stands behind deposits,” explains this in greater depth, and does allow for a little bit of doubt about the funding of that full faith and credit guarantee. However, as I said in that column and repeat here, I wouldn’t let that doubt keep you from making an insured deposit.
If you shop rates using Bankrate’s Compare Rates feature, you’ll see that the site provides you with the financial institution’s Safe & Sound rating. If you’re comparing two financial institutions with the same CD rate, pick the one with the higher Safe & Sound rating. Otherwise, feel free to chase yield with your insured deposits.
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