Dishonesty at Fifth Third Bank
I know I promised some of you information on another topic but that will have to wait for now.
My grandmother has some extra savings as any American should and given her age and risk appetite she invests (more like stores) this money in CD’s (Certificates of Deposit). Now banks just as with savings accounts offer differing rates of return with different maturity rates. Up until recently she has these CD’s at Fifth Third Bank (www.53.com), they had competitive rates they were local and given that grandma likes to have a face to speak to she kept her money there.
Now recently Fifth Third’s rates have fallen from being competitive. So grandma asked that we look around for other rates to find something that maybe would keep pace with inflation. Now I have deposited some money personally at Countrywide Bank that I am saving for a house down payment. Countrywide isn’t in the best position in the market right now and is paying wonderful rates on their CD’s to attract new money.
Yes there is a chance Countrywide Mortgage might declare bankruptcy. I don’t think their banking operations will and in any case the accounts and CD’s are FDIC (www.fdic.gov) insured. This where the dishonesty started.
I receive a call from my mother who went in with my grandmother to cash our these CD’s. When asked what they were going to do with the money, under no obligation to answer, they told them they were buying a CD at country wide. The lady was not happy and pointed out Countrywide Mortgage’s current troubles. When my mother replied well its FDIC insured and we doubt that someone would not buy them out we were at no loss of value and over double the rate offered by Fifth Third. The woman that goes on to claim the following:
- FDIC is a corporation and not a government office
- FDIC pays $0.07 on the dollar
Now both these statements are false, some more than others. The first point, FDIC is a Government sponsored corporation. "FDIC insurance is backed by the full faith and credit of the United States government"1. So true its a corporation but is backed by the Governments ability to print more money and collect taxes.
Second, FDIC pays you 1:1 up to the insured limit2. The statement about $0.07 was a scare tactic used on a old woman and I am pissed. I will not allow anyone to pull a fast one like that on my grandma. All I can say is I will not use Fifth Third for any type of banking for the forseable future.
This was down right dirty.
For those of you I do not encourage the use of CD’s for growing money. It is only short term cash. It is better to pay down your house/car/credit card before storing much more than emergency money in a savings account. If you have money to grow for more than 7-10 years you need to get into stocks and bonds, and a argument could be made to only stocks for growing money after inflation.
Oh and Jori, yes stocks traded in Euros go up in value when the dollar drops. So you can use stocks (Diversification) to fight against loss of value of the dollar.
12http://www.fdic.gov/deposit/deposits/insuringdeposits/index.html
