Credit union safety

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Tracker968
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Credit union safety

Post by Tracker968 »

A few years ago I transferred my emergency fund to US Bank because they were rated higher than my previous bank. This was when the stress tests were being done. Now with US Bank CD rates at 0.5% and Andrews credit union at 3% I am considering moving to them. Has anyone checked into, or knows how I would check into their safety rating. I know they are NCUA insured, but I'm not sure that really matters if [(removed) --admin LadyGeek]. How do you think they compare to the big banks?
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dm200
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Re: Credit union safety

Post by dm200 »

Tracker968 wrote:A few years ago I transferred my emergency fund to US Bank because they were rated higher than my previous bank. This was when the stress tests were being done. Now with US Bank CD rates at 0.5% and Andrews credit union at 3% I am considering moving to them. Has anyone checked into, or knows how I would check into their safety rating. I know they are NCUA insured, but I'm not sure that really matters if [(removed) --admin LadyGeek]. How do you think they compare to the big banks?
I am in the credit union business and I find rating services of credit unions nonsense (my opinion).

I would look for (and independently verify) NCUA federal insurance backing, as well as rates applicable to my situation, services and quality/convenience.
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Svensk Anga
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Re: Credit union safety

Post by Svensk Anga »

If that is Andrews Federal Credit Union, they look very healthy according to this: (scroll 40% down the page for the health report.)

https://www.depositaccounts.com/banks/a ... tml#health
mouses
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Re: Credit union safety

Post by mouses »

dm200 wrote: I am in the credit union business and I find rating services of credit unions nonsense (my opinion).
I thought the ratings were based on assets, loans outstanding, ratios, etc. Curious to know why this is nonsense?
financeidiot
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Re: Credit union safety

Post by financeidiot »

Is your emergency fund greater than the $250,000 NCUA insurance limit? You could always split your deposits among multiple banks and credit unions to diversify risk.
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dm200
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Re: Credit union safety

Post by dm200 »

mouses wrote:
dm200 wrote: I am in the credit union business and I find rating services of credit unions nonsense (my opinion).
I thought the ratings were based on assets, loans outstanding, ratios, etc. Curious to know why this is nonsense?
From what I understand, these "ratings" seem to be automated and give, for example, higher ratings to credit unions with higher net worth ratios. In my opinion and experience, I know many screwed up credit unions (especially small ones) with high net worth ratios.
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dm200
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Re: Credit union safety

Post by dm200 »

financeidiot wrote:Is your emergency fund greater than the $250,000 NCUA insurance limit? You could always split your deposits among multiple banks and credit unions to diversify risk.
It is, for personal accounts, usually very easy to multiply this $250,000 limit. Retirement (IRA) accounts are separately counted, as are individual and joint accounts.

John Smith and Mary Smith could have:
John IRA: $250,000
Mary IRA: $250,000
John individual: $250,000
Mary Insividual: $250,000
John and Mary Joint: $500,000

all NCUA insured - $1,500,000
Easy Rhino
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Re: Credit union safety

Post by Easy Rhino »

dm200 wrote:I would look for (and independently verify) NCUA federal insurance backing, as well as rates applicable to my situation, services and quality/convenience.
I don't have enough of an opinion on whether they're nonsense, but they just don't matter to my situations.

So I agree with the net advice, stay under the NSUSIF limit, and pick the one that's best for you for other reasons.
mouses
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Re: Credit union safety

Post by mouses »

dm200 wrote:
financeidiot wrote:Is your emergency fund greater than the $250,000 NCUA insurance limit? You could always split your deposits among multiple banks and credit unions to diversify risk.
It is, for personal accounts, usually very easy to multiply this $250,000 limit. Retirement (IRA) accounts are separately counted, as are individual and joint accounts.

John Smith and Mary Smith could have:
John IRA: $250,000
Mary IRA: $250,000
John individual: $250,000
Mary Insividual: $250,000
John and Mary Joint: $500,000

all NCUA insured - $1,500,000
I run into this at various times, with financial people who insist this can be done. I keep saying, I'm single, I'm single, and then when it doesn't penetrate, I walk way.
Geologist
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Re: Credit union safety

Post by Geologist »

I bought a brokered two-year CD from a bank with satisfactory ratings and it failed within a year. The CD was within the FDIC limit. I received the principal and accrued interest within two days in my money market account. My conclusion would be to agree with dm200 that the ratings aren't too useful.

If you are single, you have fewer opportunities to multiply the FDIC/NCUA limit. So then you just use multiple institutions.

In any case, I would hope that the OP's emergency fund is less than $250,000 and since it is all in one bank, that is the implication anyway.
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dm200
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Re: Credit union safety

Post by dm200 »

I run into this at various times, with financial people who insist this can be done. I keep saying, I'm single, I'm single, and then when it doesn't penetrate, I walk way.
Sure, a single individual does not have as much ability to multiply the coverage. Of course, that also probably means there is not as likely to be as much need.

The IRA and taxable limits are separate for one individual and the taxable limit can be doubled by naming a Payble On Death Beneficiary.
Spirit Rider
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Re: Credit union safety

Post by Spirit Rider »

mouses wrote:I run into this at various times, with financial people who insist this can be done. I keep saying, I'm single, I'm single, and then when it doesn't penetrate, I walk way.
Accounts with different beneficiaries are also considered separate accounts for the limit. So the number of accounts you can have as a single person is the number of beneficiaries + 1.
TheGreyingDuke
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Re: Credit union safety

Post by TheGreyingDuke »

mouses wrote:
dm200 wrote:
financeidiot wrote:Is your emergency fund greater than the $250,000 NCUA insurance limit? You could always split your deposits among multiple banks and credit unions to diversify risk.
It is, for personal accounts, usually very easy to multiply this $250,000 limit. Retirement (IRA) accounts are separately counted, as are individual and joint accounts.

John Smith and Mary Smith could have:
John IRA: $250,000
Mary IRA: $250,000
John individual: $250,000
Mary Insividual: $250,000
John and Mary Joint: $500,000

all NCUA insured - $1,500,000
I run into this at various times, with financial people who insist this can be done. I keep saying, I'm single, I'm single, and then when it doesn't penetrate, I walk way.
You could do separate Payable on Death (POD) accounts:

John Doe
John Doe POD Mary Jones
John Doe POD Steve Jones
etc.
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells
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Epsilon Delta
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Re: Credit union safety

Post by Epsilon Delta »

mouses wrote:I run into this at various times, with financial people who insist this can be done. I keep saying, I'm single, I'm single,
If your net worth were high enough they'd offer to fix that for you. :twisted:
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celia
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Re: Credit union safety

Post by celia »

dm200 wrote:John Smith and Mary Smith could have:
John IRA: $250,000
Mary IRA: $250,000
John individual: $250,000
Mary Insividual: $250,000
John and Mary Joint: $500,000

all NCUA insured - $1,500,000
In addition, if you have a trust, the insurance for the trust account covers $250,000 per beneficiary, as long as the beneficiaries are living people or IRS-recognized charities and inherit equal shares.
Topic Author
Tracker968
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Re: Credit union safety

Post by Tracker968 »

Yes I am under the 250 limit. I checked the ratings using the link provided and found that my two current banks are rated A, while Andrew's Federal credit Union is rated A+. So I'm going to go for it. Thanks everyone!

BTW, another thread said that they have other CDs not listed on their website, however they told me they don't.
Jags4186
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Re: Credit union safety

Post by Jags4186 »

celia wrote:
dm200 wrote:John Smith and Mary Smith could have:
John IRA: $250,000
Mary IRA: $250,000
John individual: $250,000
Mary Insividual: $250,000
John and Mary Joint: $500,000

all NCUA insured - $1,500,000
In addition, if you have a trust, the insurance for the trust account covers $250,000 per beneficiary, as long as the beneficiaries are living people or IRS-recognized charities and inherit equal shares.
If you really need FDIC insurance on boat loads of money you would go with a CDARS program. Let the bank handle all the back end, you get practically limitless coverage.
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