Your hard-earned money deserves to be protected. So rather than addressing one part of a larger issue, I want to share some of the concerns I’ve heard over the past few months and provide simplified, solid answers.
1. Do you think the Federal Deposit Insurance Corporation (FDIC) will extend its temporary increase in deposit insurance limits past December of this year?
|
|
The legislation extended a temporary increase from the standard maximum deposit insurance amount of $100,000 to $250,000 per depositor through Dec. 31, 2013. The maximum insured amount will return to $100,000 in 2014 except for certain IRAs and other retirement accounts. The extension became effective immediately upon the president’s signing.
By signing, President Obama provides banks with a stable funding source, enabling institutions to continue making credit available here in Southern Arizona and across the county.
2. I bank with a small community bank and I have some concerns about the bank’s future. How can I find out my bank’s stability and whether my accounts are safe there?
Regardless of whether your account is at a large or small bank, you can be certain of the safety of your money if you maintain the total amount per depositor within the FDIC’s prescribed limits.
You can go to the FDIC’s website — www.FDIC.gov — to check your limits with “Edie the Estimator” service. Edie will calculate your FDIC insurance coverage for each bank where you have deposit accounts. After a few minutes of processing, a printable report lets you know whether your deposits are within or exceed coverage limits.
A number of independent bank rating firms such as BauerFinancial — www.bauerfinancial.com — also monitor the stability of the nation’s financial institutions. The firm’s mission statement points out that “no institution pays for its rating, nor can it be eluded.” I highly recommend checking their Web site and seeing how your bank measures up.
3. What do you think will happen with interest rates this year?
Many experts expect short-term rates such as the national prime rate will remain unchanged or low for the rest of the year or until the economy starts to improve. This is because of the weakness of the national economy.
Long-term rates such as U.S. Treasury Bonds and home mortgage rates are another matter.
The federal government is financing historic deficits because of the recession. The increasing volume of treasury auctions and supply of bonds causes a rate uptick, encouraging more people, organizations and countries to buy these bonds. While increased rates are good for savers, the treasury rate-driven higher mortgage rates will hurt the housing market that’s suffering from a foreclosure glut and stricter mortgage lending standards.
The uptick recently occurred, and home mortgage interest rates jumped about half a percentage higher. For a 30-year mortgage, the rate rate had stayed under 5 percent for 11 weeks, it jumped over that mark in just a few days.
These three questions scratch the surface on the current financial crisis our country is going through. If you have other concerns, I recommend actively pursuing ways to find the answer. Reach out to a local banker or financial planner – we have some great ones here in Pima County that would be happy to address your needs.
Contact Fred Dawson Jr., executive vice president and chief credit officer for Commerce Bank of Arizona, at fdawson@commercebankaz.com or (520) 325-5200. Commerce Bank is a locally-owned community bank specializing in serving small- to mid-size businesses in the Tucson region. It has earned a five-star “superior” rating for financial strength and stability from Bauer Financial Inc., the nation’s leading independent bank rating firm.
Comments