Money Blue Book

Update: New FDIC and NCUA Insured Limits Extended Until January 1, 2014

After months of bank failures and gloomy economic news, we finally have some good tidings from our federal government. No, it’s not another round of stimulus checks for those of you who have been hoping and waiting with bated breath, but rather, it pertains to the FDIC insurance that guarantees the safety and security of bank deposits.

The current increased FDIC insurance limits of $250,000 were scheduled to be rolled back to the previous $100,000 limits on the last day of 2009. However just recently, Congress voted to extend the deadline for four more years – through December 31, 2013. Those of us who have significant amounts of money in the bank or sizable funds invested into long term certificates of deposit (CD rates) undoubtedly have been nervously eyeing the impending December 31 expiration date of the $250,000 threshold. Thus this news ought to come as a tremendous welcomed relief. Those of us who have been considering renewing our certificates of deposit can now consider maturities with a longer time horizon without fear of falling outside of federally protected limits.

Avoid Banks That Are Not FDIC Insured, Or Credit Unions That Are Not NCUA Protected

As many of you may know, if you have money in a bank account, your bank deposits are generally insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum current limit of $250,000. Similarly, if you have money saved in a credit union account, your deposits are insured by the National Credit Union Administration (NCUA) for the same amount as well. As federal government run entities, the two organizations jointly share in the responsibility of  insuring and regulating the stability & financial health of our nation’s banks and credit unions. All legitimate banks and credit unions operating in the United States are duly members of the relevant regulatory agency. If you are not banking at an FDIC insured institution, you’re taking a huge risk. Banks that are not FDIC insured are either international banks or scams (yes, bank Ponzi schemes do exist). While most reputable international banks offer some protection through their own governmental authorities, you will want to do everything you can to steer clear of the uninsured but high yield dealers calling themselves banks.

FDIC and NCUA deposit insurance offer the maximum peace of mind assurances available as they are backed by the full faith and credit of the United States government. In the event of a bank or credit union failure, insolvency, or bankruptcy, the FDIC and NCUA have an orderly and systematic system in place to ensure a seamless and disruption free resolution. When banks fail, the FDIC takes over. They may sell the failed bank to another more stable bank (purchase and assumption method), or they may liquidate its assets and issue full payouts to customers (pay off method), making up any shortfall of funds from its own coffers. During any bank failure proceedings managed by the FDIC and NCUA, all interest income accrued up to the date of bank failure are guaranteed and paid out as well. Contrary to popular opinion, the FDIC and NCUA resolution processes are almost always very orderly and expedient, with little lag time and disruptions to account access during the resolution transition phase. For most customers in such an occurrence, a bank failure is a non-event as they are almost always permitted to continue using their customary bank services including checks, debit cards, and electronic transfers as before. At some point however, customers may be issued new cards, checks, or online banking information.

Federal Deposit Insurance Corporation (FDIC)

Created by the Glass-Steagall Act of 1933 in response to the massive number of bank failures during the Great Depression era, the Federal Deposit Insurance Corporation (FDIC) now services as a safety net for bank deposits in the event of a catastrophic insolvency emergency or rare run on the bank. Currently, FDIC insurance provides up to $250,000 worth of protection per depositor, per insured bank for the following accounts:

• Checking account (negotiable order of withdrawals)
• Savings and money market accounts
• Certificates of deposit and other time deposit accounts
• Cashier’s checks and other checks drawn on the member bank’s accounts
• Certain investment retirement accounts (IRA’s) in deposit based accounts

Not everything is covered. As a general matter, financial investments and bank conveniences such as – stocks, bonds, money market funds, annuities, insurance policies, and even bank safe deposit boxes are not covered by the FDIC.

Because the general coverage limit that FDIC insurance provides is $250,000 per depositor per bank, there is no sense in opening multiple accounts of the same type at any one bank to circumvent this restriction. The only way to exceed this mark yet remain fully protected under permissible limits is to either spread your money among different banks, or if you wish to stick with a single bank – open multiple accounts with different deposit categories of legal ownership. The FDIC recognizes eight different ownership categories – single accounts, certain retirement accounts, joint accounts, revocable trust accounts, irrevocable trust accounts, employee benefit plan accounts, corporation/partnership/unincorporated association accounts, and government accounts. As each of these different account ownership categories qualify for its own $250,000 insurance limit,  it is possible to have total deposits of more than $250,000 at any one insured bank and still be fully insured. To demonstrate, here’s an example and run through of how a married couple could hypothetically insure up to $2 million at any one bank:

• Husband and wife each deposits $250,000 in separate individual accounts
• Together, they have $500,000 in a shared joint account
• Individually, each has $250,000 in separate IRA deposit accounts
• Each also sets up a $250,000 revocable trust account, payable on death, naming the other one as beneficiary

Avoid banking with institutions or organizations that are not covered by federal government insurance. Particularly if you are a high yield savings account or bank rate chaser like myself, more likely than not you’ll come into contact with online banking names like Dollar Savings Direct, EverBank, Ally Bank, or even E-trade – bank names that are either unfamiliar to you or names whose reputations or stability concerns you haven’t fully vetted yet. While most reputable banks will clearly display their FDIC insured member logos, it’s always important to confirm this fact for yourself. Verifying your bank’s FDIC insurance coverage is easy – simply call the FDIC’s telephone number at: 1-877-275-3342, or preferably, visit the online FDIC Bank Find page. To find an institution by FDIC certificate number (every FDIC member institution carries one) or to search via geographical or statistical criteria, simply click on “More Search Options” via FDIC Bank Find for more choices. As the Bank Find website notes, the service can also help you answer pressing questions such as – Is my bank insured? Where are my bank’s branches located? Where is my bank’s home (main) office located? What is my bank’s web site address? What happened to my bank (historical list of events)? Does my bank have a new name? And Is my bank still open?

National Credit Union Administration (NCUA)

All legitimate credit unions in the United States offer deposit insurance protection for their account holders via the NCUA. The National Credit Union Administration is the independent federal agency that supervises and regulates the operations & stability of all federal not-for-profit credit unions.

Like the FDIC, the NCUA’s insurance limits are guaranteed by a federal fund that’s backed by the full faith and credit of the United States government, and as such, are 100% safe from catastrophic loss or insolvency. Now that the $250,000 coverage limits provided by the National Credit Union Share Insurance Fund have been extended through December 31, 2013, credit union customers should be able to rest easier. Hopefully the higher protection limits will be extended into indefinite perpetuity or made legally permanent. Beats me why the FDIC and NCUA haven’t already done so.

If you have an account at a credit union, chances are your funds are protected by NCUA member insurance, with account protection rules and different account ownership categories that are similarly set up to run as that offered by FDIC insurance. However, to be sure, it’s always important to confirm that your credit union is a legitimate entity and fully insured before doing business with them. If you are unable to find a NCUA member placard logo displayed anywhere on the credit union’s website or store front, I’d recommend that you confirm its membership by calling the NCUA’s telephone number at 1-800-755-1030, or by preferably visiting the NCUA’s Is My Credit Union Federally Insured lookup page.

Review Of Ally Bank.com’s High Yield Money Markets, Savings, and CD Offers

After a rather bumpy ride over the last few years, the financial institution formerly known as GMAC Bank is now Ally Bank. In mid-May 2009, the former financial lending and banking arm of General Motors took the first of what it hopes to be a series of reinvigorating steps towards distancing itself from the much criticized and tainted image of the now bankrupt auto maker.

Since then, many of you may haven noticed their recent aggressive purple-themed advertising blitz on TV spots and online ads. With the launch of Ally Bank, the company is undertaking a massive promotional effort to differentiate itself from the collectively damaged reputations of other struggling online banks in the hopes of  positioning itself as a commercial advocate of honesty, transparency, and accountability. Though the former bank has been struggling mightily in the midst of the worst economic recession and subprime mortgage crisis in decades, now that it’s flush with bailout funds courtesy of the federal government’s Troubled Asset Relief Program (TARP), the new Ally Bank is now sufficiently stabilized to concentrate on growing its depositor base and rebuilding its image.

Currently, Ally Bank’s interest rate offers are extraordinarily competitive and have been consistently dominating the high end of the bank rate spectrum. If you are willing to accept the view and belief (as you perhaps ought to) that the government’s FDIC insurance protections are more than adequate to guarantee the safety and security of your banking assets in the case of any unforeseen scenario, Ally Bank’s high interest account rates alone ought to be worth some measure of consideration. Whether Ally Bank’s quest to transform itself will be successful remains to be seen. However, in terms of the top rates alone, Ally ranks among the very best online banks, as you won’t find too many non-teaser rate offers that can match the consistency and aggressiveness of Ally Bank’s high interest deals. In terms of product lineup diversity, the bank also touts a few special banking products not readily found elsewhere – most notably, the Ally Bank No Penalty CD. Other offers include:

1. Online Savings Account – The high yield online savings account from Ally Bank earns a very high interest rate – much higher than other banks.
2. Money Market Account – With no account minimums and no monthly fees, the Ally Bank money market account offers versatile check writing and free ATM fee reimbursement privileges.
3. Classic CD – The classic fixed interest certificate of deposit from Ally Bank offers a variety of high yielding CD rates for different term limits, all with no minimum deposit requirements. Interest is compounded daily for maximum earnings.
4. No Penalty CD -  The highly coveted No Penalty CD from Ally Bank allows you to withdraw your money and put it anywhere, without the hassles or shortfalls of an early withdrawal penalty. This special CD offer has no fees of any kind and offers high fixed interest rates with no minimum deposit stipulations.

Ally Bank’s High Interest Rates – An Illusory Scam Or A Legitimate Offer?

Let’s focus on Ally Bank’s greatest and most dominant selling feature – its consistently favorable high yield savings account and CD rates. Despite the depressed state of interest rates across the board, Ally’s current rates have always remained one of the highest. Its perpetual financial issues have forced Ally to continuously offer very competitive interest rate yields to attract new account depositors. Interestingly, it’s these same perpetually high rates that have been recently raising the ire of competing banks, who via the American Banking Association (ABA) lobbying group have complained to the FDIC that the extraordinarily high deposit rates offered by Ally Bank are unfair due to its status as a recipient of subsidized federal taxpayer funds. Ally Bank has responded to the conflict by accusing the other banks of wanting to stifle competition to the detriment of consumers.

It may be a rather draconian way of looking at it, but I feel Ally Bank’s loss is our potential gain as prospective banking customers. Ally Bank’s continued desperation to acquire new deposits and stay sufficiently capitalized, and its willingness to continuously shell out the highest rates to accomplish this objective – is our potential windfall as interest rate seekers. For the foreseeable future, I don’t believe Ally Bank’s rates will plummet any time soon. So long as it continues to be closely monitored by federal government regulators and continues to stay aggressive in its ambitious plan to re-invent its brand, Ally Bank will continue to be a top tier destination for aggressive rate chasers. Let’s just hope the bank can ultimately turn things around and not meet the same failed fates as IndyMac Bank and Washington Mutual.

Ally Bank’s Quest To Build A Better Bank – With No Minimum Deposits, No Fees, No Minimum Balances, and Improved Customer Service

So what’s your personal take on Ally Bank’s recent name change from GMAC Financial to Ally? Great decision to rename itself and shed the tainted reputation of its former self – or merely putting lipstick on a pig as some people have put it? Personally, as a former long standing GMAC Bank customer, I’m extremely pleased that Ally Bank’s decision to overhaul itself included a major name change. While a name change in of itself isn’t capable of changing the corporate culture or altering the pre-existing way of doing things, at the very least it’s a significant gesture that the bank is trying to go in a different direction.

Hoping to improve its relationship with customers and usher in honesty and openness, the new Ally Bank has rewritten its explanations of financial terms in very simple language, curtailed much of its former usage of disclaimers, and pretty much done away with old school tactics such as implementing introductory teaser rates, monthly fees, and minimum deposit requirements. With these changes, the bank has also tweaked its best product features to make them more attractive. Currently, you’ll find that Ally Bank sits at the top or near the top of all ranked reviews of the best money markets, the best high yield savings accounts, and the best CD rates for everything from 6 month to 12 month certificates of deposit. The savings account and CD rates that Ally Bank touts is frequently many times over the national average – topping even the offerings of the best online banks.

Ally Bank has also drastically overhauled its customer service system – installing and heavily promoting its laudable 24 hour, 7 days a week customer service accessibility. In fact, this improved feature is pretty much plastered everywhere on the new Ally Bank website. To test out Ally Bank’s new customer service improvements, I purposely called a few times at weird hours of the night and a few times during office hours. In response to my cadre of banking questions, I received pretty targeted and courteous answers (something I don’t always get from more established banks like Citibank). Of course, despite the company’s financial difficulties in the past, the former GMAC Bank’s customer service reputation has always been generally well regarded in most editorial reviews. Here a quick run through of Ally Bank’s best new features:

1. Promise of the Best Rates: Ally Bank has indicated that it is committed to consistently offering the best savings products featuring the best rates. Historically, the former GMAC Bank has delivered, and at present is still delivering on this promise.
2. No Fake Teaser Rates: Ally Bank states that it will no longer be offering introductory “bait and switch” teaser rates that start very high but later crash. Let’s hope Ally can indeed keep those rates perpetually high.
3. No Minimums: There are no more minimum deposits or minimum balances required at Ally Bank. Feel free to open a new account with a whopping $0.00
4. No Sneaky Disclaimers: More transparency on rates and terms along with less usage of confusing legalese and jargon.
5. No Penalty CDs With No Strings Attached: One of Ally Bank’s best new features is the no withdrawal penalty certificate of deposit. Customers can withdraw funds prior to the maturity date without paying a fee and transfer the funds to any account at any bank without penalty charge.
6. Sleeping Money Alerts: In an effort to encourage customers to continuously seek out higher rates, Ally Bank will send out notices to customers when funds have been idle and could be earning a higher rate of return.
7. 24/7 Customer Service: Ally Bank now offers around the clock 24 hour, 7 days a week access to a live call center agent for customer assistance help. Just dial (1-877-247-ALLY)

Full FDIC Insurance Limit Protection With Ally Bank Up To $250,000

If you are like many of the high interest rate seekers out there drawn to the new Ally Bank because of its exceptionally high rates, you ought to be mindful of the online bank’s viability issues and ability to stay operational. Despite the name change, Ally Bank is still the same struggling GMAC Bank, at least until its aggressive marketing allows it to snag more customer deposits and become better capitalized. Until then, the possibility of an Ally Bank failure is always a real and serious concern.

But fortunately, like most reputable banks out there, Ally Bank accounts are fully insured and guaranteed by the United States government’s FDIC insurance – confirmed as FDIC certificate 57803. Based on recent changes with FDIC regulations, bank account deposits at FDIC insured banks are now insured up to $250,000 through December 31, 2013. With FDIC insurance, your Ally Bank savings and CD accounts are completely shielded from loss and backed by the full faith and credit of the federal government to be safe in the event of any unforeseen banking collapse. So long as you stay within the $250,000 FDIC limits, regardless of what happens to Ally Bank, there really is no need to be nervous – your assets are fully protected. If you are unsure about putting your money into the hands of a newly renamed bank with a past, there are plenty of other highly rated banks to choose from – albeit touting rates that aren’t as lucrative or as high as that offered by Ally Bank.

Extra Information and Resource

• Ally Bank ABA/Routing Number for direct deposits and ACH transfers: 124003116
• Ally Bank Customer Phone Number: 1-877-247-2559 for 24/7 assistance
• Ally Bank E-mail: customercare@ally.com

News Update: AllyBank.com Is the New Financial Face Of GMAC Bank

As of mid-May 2009, GMAC Bank is now officially called Ally Bank. With a new aggressive marketing blitz on cable TV channels and via Internet ads, the new purple themed Ally Bank is embarking on a quest to rebrand its image and change the public’s perception of its former beleaguered self. Touting the new banking persona as a new and better type of bank – an ally and friend to consumer customers of sorts, AllyBank.com’s new banking slogan is – “No minimum deposits. No monthly fees. No minimum balance. No sneaky disclaimers.”

Sporting a very impressive array of high yield savings accounts, money market accounts, and high interest CD rates, Ally Bank is hoping to win the public over with its dazzling new message and cache of revamped services. Looking back at its history, the bank formerly known as GMAC Bank has certainly had quite a rough and tumultuous ride to get to where it is today.

Ally Bank – Starting Anew With A Fresh New Name and Top Tier Rates

For those not in the know, Ally Bank used to be GMAC Bank, a bank built on the troubled and rather shaky foundations of GMAC Financial Services – the banking, savings, and financial lending arm of currently bankrupt American vehicle manufacturer General Motors (GM). Originally established as a lending authority to provide automotive financing loans to car buyers and auto dealerships of GM brand vehicles, GMAC has been hit particularly hard by the housing crisis and subprime mortgage meltdown. The resulting economic recession, coupled with surging unemployment rates and the collapse of consumer spending, which in turn has had a significantly negative impact on automobile purchases – have all severely hit the company’s bottom line, pushing it to the abysmal financial brink.

On the verge of collapse, GMAC Financial was one of many financial institutions that ultimately converted itself from a loan issuer and servicer into a new bank holding company (dubbed GMAC Bank) to make itself eligible for the federal government’s infamous taxpayer-funded Troubled Asset Relief Program (also known as TARP). But saddled under the burden of its toxic cache of bad lending decisions and struggling under the weight of its subprime home mortgage loans, not to mention the operational losses of billions of dollars, the converted GMAC Bank has since embarked on a rather valiant but desperate quest to save itself by building a new reputation as a legitimate deposit institution. To start anew and completely re-design its banking image, in the middle of May 2009, GMAC Bank dropped its own namesake moniker from its brand, officially changing its name to Ally Bank in order to shed the reputational baggage of its former connections. Only time will tell whether the newly minted Ally Bank’s ambitious plans will prosper and succeed.

For now at least, Ally Bank remains one of the top online banks in terms of offering the best high interest savings account deals and high yield CD rate offers – pretty much continuing where GMAC bank left off. Despite its troubles, GMAC had always offered top interest rates for its banking products – and Ally Bank appears to be no different in this positive regard. Due mostly to its ambitious plans to establish itself as a leading and reputable provider of high interest banking products, if I had to project – I would wager that Ally Bank rates will likely stay perpetually high for quite some time. In terms of motivation to keep existing rates at their highest market peaks, Ally Bank’s shaky past actually works in the favor of prospective consumers. Desperate to capture the attention of skeptical new customers and convince them into becoming loyal bank depositors, Ally Bank is likely going to have to keep its interest rates high to achieve its lofty new business acquisition and retention goals.

Ally Bank.com’s New and Impressive High Interest Banking Products

Along with the notable name change, Ally Bank has also significantly improved its banking website and modified its product offerings to comport with the new and improved image. The company has made drastic upgrades to its customer service features – now offering zero wait time, 24 hours, 7 days a week telephone customer support (1-877-247-ALLY) – boldly plastering this new convenient feature on every page of its online banking website.

As the new name is supposed to conjure up images of a neighborly local credit union that’s genuinely in tune with the needs of its customers, Ally Bank’s former features and previous limitations have been re-worked and re-tooled to offer up a seemingly better banking experience. Eager to re-brand itself as an honest, straightforward, and transparent bank, the folks at Ally Bank have completely done away with all minimum deposit requirements, monthly fees, and minimum account balance charges. New Ally Bank customers are now free to deposit as little or as much as they wish into their new online savings or CDs, as all account deposits now enjoy the maximum interest rate offered regardless of balance. Here are some of the new and very compelling bank deals and offers from Ally:

1. Online Savings Account – The high yield online savings account from Ally Bank earns a very high APY rate – much higher than its competitors.
2. Money Market Account – With no account minimums and no monthly fees, the Ally Bank money market account with check writing privileges can be opened with as little as $1.
3. Classic CD – The classic fixed interest certificate of deposit from Ally Bank with automatic renewal features is a high yielding CD with no monthly fees and no minimum deposit requirements. The CD account compounds interest daily for maximum rate earnings.
4. No Penalty CD – The new and unique No Penalty CD offer from Ally Bank allows you to withdraw your money and put it anywhere, without the hassles or shortfalls of an early withdrawal penalty fee. This special CD account has no fees of any kind and offers high fixed rates with no minimum deposit requirements.

FDIC Insurance Guarantees and Protects Ally Bank Customers From Loss

If you remain unsure and uneasy about the safety and security of money deposited with Ally Bank – you’re not alone. Despite the name change, Ally Bank is still essentially the same embattled GMAC Bank, but with a new shiny purple colored exterior and improved marching orders. Those who are concerned about the safety of their money in the event of a major run on the bank have good reason to be worried. Bank failures and financial instability are serious issues in this day and age, as several major banking institutions like IndyMac Bank and Washington Mutual have poignantly demonstrated in the past few months.

Fortunately, Ally Bank deposits are fully insured by the Federal Deposit Insurance Corporation (FDIC) up to the maximum coverage limits. FDIC insurance currently insures all of Ally Bank’s certificate of deposit options, online savings accounts, and money market accounts up to $250,000 per depositor. Per recent changes with FDIC regulations, bank account deposits at FDIC insured institutions are now insured up to $250,000 through December 31, 2013. With FDIC insurance, your savings and accounts are completely guaranteed by the full faith and credit of the United States government to be safe from loss and protected in the event of any catastrophic banking failure or bankruptcy. So long as you stay within those limits, you will be fine.

As a former GMAC Bank customer myself, I woke up one day to find that my accounts had been converted over to the new Ally Bank. The conversion was surprising but not unwelcome as I rather like the new and improved features. As my new Ally Bank savings account rates have remained high and stayed the same, I have little to complain about. But don’t take my word for it – if you are interested in Ally Bank, visit their new website at AllyBank.com and check it out for yourself.

For a more in depth critique and assessment of the newly renamed GMAC Bank, you may want to read my detailed Ally Bank review. Feel free to share your experiences and thoughts!