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. (Editor’s note: As of October 2008, FDIC insurance covers deposits up to $250,000 per account. This limit is due to expire on December 31, 2013.)

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.

To ask a question of Dr. Don, go to the ” Ask the Experts” page, and select one of these topics: “Financing a home,” “Saving & investing” or “money.”

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