Bank of America Gives 2% CD rates

[karim0028]

Hey guys,

I was at BAC and noticed that they have a 2% No penalty CD rate, which strikes me kind of odd seeing how the Govt treasuries are not evening giving that much.... This is a completely liquid CD, as in you can pull it out tommorow with no penalty.... This CD apparently is covered by FDIC insurance....

Should this be of concern to BAC customers? Does that mean this bank is on the way out? I also am not sure how to feel as this bank sucked in several billion in tax payer dollars and now is giving out the highest rates i have seen a "normal" walk in bank give aside from the "new" GMAC bank..

[ASH]

Re: Bank of America Gives 2% CD rates

Hey guys,

I was at BAC and noticed that they have a 2% No penalty CD rate, which strikes me kind of odd seeing how the Govt treasuries are not evening giving that much.... This is a completely liquid CD, as in you can pull it out tommorow with no penalty.... This CD apparently is covered by FDIC insurance....

Should this be of concern to BAC customers? Does that mean this bank is on the way out? I also am not sure how to feel as this bank sucked in several billion in tax payer dollars and now is giving out the highest rates i have seen a "normal" walk in bank give aside from the "new" GMAC bank..

That would seem to flag a capitalization problem.

[karim0028]

Re: Bank of America Gives 2% CD rates

Exactly, which scares me since i just deposited a large chunk of cash with them..... Anyone here bank with them and feeling the same way?

[ASH]

Re: Bank of America Gives 2% CD rates

Exactly, which scares me since i just deposited a large chunk of cash with them..... Anyone here bank with them and feeling the same way?

I bank with them. Last summer, I would have pulled my money out, because I wasn't sure how things would play when banks started to fail. I wasn't clear as to whether retail banking operations would be kept open, or whether the size of the FDIC insurance fund mattered. So, for instance, I advised my boss to trim our company's deposits with Washington Mutual down to the FDIC-protected limit, a bit before WaMu went down. Now, however, I think it's pretty clear that the Feds will find some way to protect the nominal value of deposits, up to the FDIC-insured limit -- regardless of how much money is actually in the FDIC fund. After all, they have a magic money machine, and they are most definitely done allowing fear and uncertainty about institutional failures to prevail. Also, the Feds seem to have done a good job of keeping retail banking operations going without interruption at the failed banks. So, although I wouldn't keep more than the FDIC-insured amount at these institutions -- and although I keep extra cash on hand, based on EJ's advice from the summer -- I'm not motivated to close my small checking account at BAC. However, if you want to be certain of immediate access to your "big chunk of cash", you should probably move it elsewhere.

[rj1]

Re: Bank of America Gives 2% CD rates

Hey guys,

I was at BAC and noticed that they have a 2% No penalty CD rate, which strikes me kind of odd seeing how the Govt treasuries are not evening giving that much.... This is a completely liquid CD, as in you can pull it out tommorow with no penalty.... This CD apparently is covered by FDIC insurance....

Should this be of concern to BAC customers? Does that mean this bank is on the way out? I also am not sure how to feel as this bank sucked in several billion in tax payer dollars and now is giving out the highest rates i have seen a "normal" walk in bank give aside from the "new" GMAC bank..

I got a 5% CD from Wachovia in October 2007.

[cjppjc]

Re: Bank of America Gives 2% CD rates

I bank with them. Last summer, I would have pulled my money out, because I wasn't sure how things would play when banks started to fail. I wasn't clear as to whether retail banking operations would be kept open, or whether the size of the FDIC insurance fund mattered. So, for instance, I advised my boss to trim our company's deposits with Washington Mutual down to the FDIC-protected limit, a bit before WaMu went down. Now, however, I think it's pretty clear that the Feds will find some way to protect the nominal value of deposits, up to the FDIC-insured limit -- regardless of how much money is actually in the FDIC fund. After all, they have a magic money machine, and they are most definitely done allowing fear and uncertainty about institutional failures to prevail. Also, the Feds seem to have done a good job of keeping retail banking operations going without interruption at the failed banks. So, although I wouldn't keep more than the FDIC-insured amount at these institutions -- and although I keep extra cash on hand, based on EJ's advice from the summer -- I'm not motivated to close my small checking account at BAC. However, if you want to be certain of immediate access to your "big chunk of cash", you should probably move it elsewhere.

I recall the FDIC paid all WaMu depositors regardless of amount. Newpaper articles about people having over $900,000, and getting it all back.

[ASH]

Re: Bank of America Gives 2% CD rates

I recall the FDIC paid all WaMu depositors regardless of amount. Newpaper articles about people having over $900,000, and getting it all back.

Yeah -- having seen that, I have concluded that there's not much reason to pull money out.

[ASH]

Re: Bank of America Gives 2% CD rates

I got a 5% CD from Wachovia in October 2007.

I think the annual CPI-U inflation rate from October 2006 - 2007 was 3.5% so I guess you got about 1.5% over inflation. That's pretty comparable, isn't it?

[Jay]

Re: Bank of America Gives 2% CD rates

I have kept my BoA account open because it is hooked into everything in my life and the risk of it going under isn't high enough for me to make me move it. I keep the balance very low, way under the FDIC limit, and buy physical gold when my balance gets too high for my liking. I have enough greenbacks squirreled away for a rainy month or two and feel that BoA is likely "too big to fail." If it does, the amount in the account I will need to haggle over with the FDIC won't hamper me too much. The bulk of my cash position is in a US Treasury backed money market with Vanguard.

[charliebrown]

Re: Bank of America Gives 2% CD rates

Last year when there was a lot of "juice" in the banking stocks, i used the following MO to buy puts on the bank. Really high CD rates offered, and CEO makes public statements saying they are well capitalized. Well today BOA has those marks. However at $3 a share there is not much juice left in BOA, and you never know what kind of life line they will get thrown to them by the feds, so I sould not short them or buy puts.

I have my checking account at Chase, which today got downgraded by Standard and Poors rating agency. I have opened another checking account a local credit union. I keep my Chase account balance at less than 5K, so I can write a few big checks without worring about them bouncing (property tax, fed income tax).

As ash has said, i doubt if the gvt will let boa fail in a bad way. I am not sure that someday there might be a disruption to normal banking activities (Bank Holiday?). If Chase goes down, I think I will get my money back through the FDIC, but what about my chase Visa? Will the card have a black out? Will the terms change if chase is nationalized, merged, etc? What about my ATM will it have continuous function?

That is why I now have a lot of cash in my possesion, and opened the credit union account. I used to have $20 in cash and charge everything. Now I still charge everything, but have cash to back it up. I dont keep a balance.

I have a friend who works in a bank and told me it was technically illegal to store cash in a safe deposit box. Is this true? Anyone want to comment on this?

As Jay, I keep the bulk of my cash in Vanguard Treasruy Money Market. Any thoughts about the safety of this if the wheels come of the bus?
Should I open a treasury direct account?

[Jay]

Re: Bank of America Gives 2% CD rates

Last year when there was a lot of "juice" in the banking stocks, i used the following MO to buy puts on the bank. Really high CD rates offered, and CEO makes public statements saying they are well capitalized. Well today BOA has those marks. However at $3 a share there is not much juice left in BOA, and you never know what kind of life line they will get thrown to them by the feds, so I sould not short them or buy puts.

I have my checking account at Chase, which today got downgraded by Standard and Poors rating agency. I have opened another checking account a local credit union. I keep my Chase account balance at less than 5K, so I can write a few big checks without worring about them bouncing (property tax, fed income tax).

As ash has said, i doubt if the gvt will let boa fail in a bad way. I am not sure that someday there might be a disruption to normal banking activities (Bank Holiday?). If Chase goes down, I think I will get my money back through the FDIC, but what about my chase Visa? Will the card have a black out? Will the terms change if chase is nationalized, merged, etc? What about my ATM will it have continuous function?

That is why I now have a lot of cash in my possesion, and opened the credit union account. I used to have $20 in cash and charge everything. Now I still charge everything, but have cash to back it up. I dont keep a balance.

I have a friend who works in a bank and told me it was technically illegal to store cash in a safe deposit box. Is this true? Anyone want to comment on this?

As Jay, I keep the bulk of my cash in Vanguard Treasruy Money Market. Any thoughts about the safety of this if the wheels come of the bus?
Should I open a treasury direct account?

Itulip's position has always been a treasury direct account. I have played it this way for convience only as I still trade believe it or not. (SKF has been good to me :cool I like Vanguard and trust them and have had an account with them forever. I hope my trust is founded, John Bogle always impressed me. I'm sure some of the more savvy financial players here would play it differently.

[cjppjc]

Re: Bank of America Gives 2% CD rates

Quote:

Originally Posted by cjppjc I recall the FDIC paid all WaMu depositors regardless of amount. Newpaper articles about people having over $900,000, and getting it all back.

Yeah -- having seen that, I have concluded that there's not much reason to pull money out.

Except that the FDIC is making noise about running out of money. I think in the future anyone with over $250,000 is running a huge risk.

Btw: I believe that is not per account. It's per bank. They always use the word account. But someone I know asked a bank manager and they said the limit was per customer.

[BigLandbaron]

Re: Bank of America Gives 2% CD rates

Btw: I believe that is not per account. It's per bank. They always use the word account. But someone I know asked a bank manager and they said the limit was per customer.

This is true. If you have multiple accounts with one bank, add up your balances and start worrying if they total over $250K per bank.

Be aware that if you are listed on the accounts of others (I am on my mother's account in the case she passes away and I need to tap her cash for her funeral and to resolve the estate), this also contributes to your $250K MAX coverage per bank. The bank told me they split the account by the number of authorized to use it, that sum would be added to MY account holdings in the case of default by the bank and FDIC comes in with the guarantees.

Example: If Mom had $250K in the bank and I had another $250K in the bank, and I'm listed secondary on her account, I actually have $125K coverage on my own accounts if/when the bank goes under.

[aaron]

Re: Bank of America Gives 2% CD rates

That is why I now have a lot of cash in my possesion, and opened the credit union account. I used to have $20 in cash and charge everything. Now I still charge everything, but have cash to back it up. I dont keep a balance.

I used to do that too. Recently, I decided to use cash for everything I can. I am tired of feeding the credit card companies. It is my small protest against the "man".

[touchring]

Re: Bank of America Gives 2% CD rates

Hey guys,

I was at BAC and noticed that they have a 2% No penalty CD rate, which strikes me kind of odd seeing how the Govt treasuries are not evening giving that much.... This is a completely liquid CD, as in you can pull it out tommorow with no penalty.... This CD apparently is covered by FDIC insurance....

Sorry, but should the FDIC guarantee even be taken seriously? How is the FDIC going to cover a bank with trillions in assets when it has only got a few billions?