Safest banks for my down payment?

September 18, 2008 3:56 PM

I recently sold my house and got a significant chunk of money which I will be using for my next down payment. It's over the FDIC limit. With all the turmoil going on, I'm looking for suggestions of either a) good, solid FDIC-insured banks to open accounts in, or b) reliable, up-to-date sources of information on bank soundness that are understandable by ordinary folk.

Details: I do not know exactly when I will be buying a house - it could be three months, it could be a year. All of the down payment money right now is in ING Direct savings accounts, as part of a revocable living trust. I need to protect between $300K and $400K.

I have banking relationships with USAA and WaMu already as well as ING. I'm not that keen to put anything more into WaMu until the dust settles on who they've raffled themselves off to. So I need two more $100K allowances. I would also like to get as good an interest rate as I can without locking myself into a CD.

Bonus points for having branches in the Berkeley area, for not aggressively pushing a bazillion other products once they've got my cash, and for being able to turn things around very fast when it's time to buy. (Even in this real estate market, houses around here close escrow quickly.)

So what are the best banks for me, or the best ways to find them? I've looked at bankrate.com; how accurate are their ratings?

posted by anonymous to Work & Money (8 answers total)

From the FDIC's website:

What does FDIC deposit insurance cover?
FDIC insurance covers all types of deposits received at an insured bank, including deposits in checking, NOW, and savings accounts, money market deposit accounts, and time deposits such as certificates of deposit (CDs).

FDIC deposit insurance covers the balance of each depositor's account, dollar-for-dollar, up to the insurance limit, including principal and any accrued interest through the date of the insured bank's closing.

The FDIC does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these investments were bought from an insured bank.

The FDIC does not insure U.S. Treasury bills, bonds, or notes. These are backed by the full faith and credit of the United States government.

How much insurance coverage does the FDIC provide?
The basic insurance amount is $100,000 per depositor, per insured bank.

The $100,000 amount applies to all depositors of an insured bank except for owners of certain retirement accounts, which are insured up to $250,000 per owner, per insured bank.

Deposits in separate branches of an insured bank are not separately insured. Deposits in one insured bank are insured separately from deposits in another insured bank.

Deposits maintained in different categories of legal ownership at the same bank can be separately insured. Therefore, it is possible to have deposits of more than $100,000 at one insured bank and still be fully insured.
posted by HotPatatta at 4:19 PM on September 18, 2008

For safety why not just divide the amount into $100k or less and deposit into however many different banks you need. I am sure there may be better ways but at least you protect your money.
posted by JayRwv at 4:32 PM on September 18, 2008

Spread it around.

$100k in your ING account.

$100k in an HSBCdirect account.

$100k in a Bank of America account.

$100k in a Vanguard Prime money market account.

$100k in a TD Ameritrade money market account.

The money market accounts are just as liquid as an ING or BofA savings account, and you needn't worry about Vanguard or TD Ameritrade breaking the buck.
posted by mark242 at 4:35 PM on September 18, 2008 [1 favorite]

Are you married? My understanding is that you can put $100k in one bank in your name, $100k under your spouse's name, and $100k as a joint account and get $300k in insurance from one bank.

Since you have money in living trust however, you may want to take the FDIC up on this advice:

"Note: Determining coverage for living trust accounts can be complicated and requires more detailed information about the FDIC's insurance rules than can be provided in this publication. If you have a living trust account, contact the FDIC at 1-877-275-3342 for more information."
posted by Jahaza at 5:21 PM on September 18, 2008

I'm happy with E*TRADE, who currently offer a respectable 3.30% on savings (and have historically been fairly competitive). The downside is they don't have a lot of branch offices.
posted by justkevin at 5:26 PM on September 18, 2008

You might also want to try your local credit union though they are not FDIC insurared they should be backed by the National Credit Union Share Insurance Fund (NCUSIF), a federal fund backed by the full faith and credit of the United States government.
Like the FDIC they will back your money up to $100,000 plus no Credit Union has had to tap into the fund for like 40 years. and with them you could get a home loan at a pretty good rate
posted by CollegeNelson at 9:38 PM on September 18, 2008

Also be aware that you're covered up to $100,000 all in -- that includes whatever interest has accrued to the account. If you want to make sure every last cent is insured, give yourself some room for the account to grow a bit.
posted by incessant at 8:34 AM on September 19, 2008

Speaking of local credit unions, if you work in SF, give Redwood CU a try. I haven't tried the East Bay credit unions, so I'm not saying Redwood is better, nor do I know all the relevant details (interest rates and speed of withdrawals). But I can only verify that they are easy to deal with and provide helpful, real-person customer service.
posted by salvia at 11:51 AM on September 22, 2008