Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I used to work with someone who told me that in the 80s he would shoot for the highest paying Texas S&Ls, knowing that there was a good chance they'd go under. His experience differed from yours - he generally got his money back within a few days after an S&L failed.
This shows the problem with anecdotes; by definition they make for very small, non-randomly selected sample sets. Not that experience should be disregarded, just that people tend to give it too much weight. I don't disregard the GFC, but a repeat is not at the top of my list of concerns.
What's the concern here? An industry-wide meltdown ("S and L crisis") or the possible failure of individual banks ("Unlikely either of these banks will go belly up ... but ...")?
Regarding the latter, the FDIC has a fine track record of moving accounts from failed banks to new banks over a weekend. By Monday, they're up and running. (From past readings; not researching now.) Also, FWIW, depositaccounts.com rates Sallie Mae A+ on health. Navy Fed earns an A.
Regarding insurance limits: with careful account titling, an account owner can easily get $500K or more in coverage at a single bank. That's because the $250K limit applies separately to different types of accounts.
You get $250K coverage for the total amount you have in your individual accounts at a bank. If you name beneficiaries on the account (POD), then you can get a separate $250K in coverage for each beneficiary you name. So if you name 4 beneficiaries, you can get $1M coverage (4 x $250K) on that one account alone. Then we get into separate coverage for joint accounts, separate coverage for IRAs. https://www.fdic.gov/deposit/covered/categories.html
The issue with your bank going under while you hold your CDs is both opportunity cost (can't reinvest money until it comes back to you via FDIC) and needing the money for expenses etc. We had some CDs go bust in the S and L crisis and it took several months as I remember to be made whole. It may be quicker now. Unlikely either of these banks will go belly up in two years but who knows? You pay for convenience at Brokers. 0.05% is a large fraction of 3% but $500 of $100,000. Obviously it adds up. If you are investing more than that in the Navy Federal, I guess you know what you are doing.
Navy Fed is of course a Credit Union. All over the world. There's no guarantee, of course. But the Credit Union is federally insured via the Credit Unions' insurance scheme of their own, since they're neither banks nor thrifts.
I opened an account with Navy Fed many years ago to buy great CD's when I lived in a town that had a branch. Now having moved away and using ACH- ACH limits in and out out of credit unions are quite small compared to online banks. So unless you live in the same town or your current bank will let you ACH transfer large amounts, be aware that your transfers will be limited using Navy Fed ,as I found out a few weeks ago. I cannot remember their limits but it was too small for my needs.
There seems to be a $5K ACH limit for Navy Fed-initiated transfers, but I don't see a limit on transfers initiated from outside.
Wiring out will definitely cost you money ($14/wire plus potential fees on the receiving end), but you might be able to wire in at no cost. Fidelity charges nothing for wire transfers, and wires are free for Flagship ($1M+) customers at Vanguard. (They were free for everyone at Vanguard until July 20, 2017.)
You could keep a Navy Fed checking account and write a check to pull money out. Getting a check in is a bit more problematic, though it doesn't cost much. A mere 55¢. When it absolutely, positively has to be there in a fortnight.
The 5K sounds right if Nav Fed initiated. If your bank or CU doing the pulling or pushing also has similar small ACH limits and this could be so, depending on where you have the account, you will be limited in this respect.
I'm old fashioned. Let the P.O. do its job, delivering a paper check. But of course, if you hold a sufficient balance in Navy Fed's ordinary savings account, you can just use the online instructions to fund a CD with $$$ from your already-existing savings or checking account.
Comments
This shows the problem with anecdotes; by definition they make for very small, non-randomly selected sample sets. Not that experience should be disregarded, just that people tend to give it too much weight. I don't disregard the GFC, but a repeat is not at the top of my list of concerns.
What's the concern here? An industry-wide meltdown ("S and L crisis") or the possible failure of individual banks ("Unlikely either of these banks will go belly up ... but ...")?
Regarding the latter, the FDIC has a fine track record of moving accounts from failed banks to new banks over a weekend. By Monday, they're up and running. (From past readings; not researching now.) Also, FWIW, depositaccounts.com rates Sallie Mae A+ on health. Navy Fed earns an A.
Regarding insurance limits: with careful account titling, an account owner can easily get $500K or more in coverage at a single bank. That's because the $250K limit applies separately to different types of accounts.
You get $250K coverage for the total amount you have in your individual accounts at a bank. If you name beneficiaries on the account (POD), then you can get a separate $250K in coverage for each beneficiary you name. So if you name 4 beneficiaries, you can get $1M coverage (4 x $250K) on that one account alone. Then we get into separate coverage for joint accounts, separate coverage for IRAs.
https://www.fdic.gov/deposit/covered/categories.html
Wiring out will definitely cost you money ($14/wire plus potential fees on the receiving end), but you might be able to wire in at no cost. Fidelity charges nothing for wire transfers, and wires are free for Flagship ($1M+) customers at Vanguard. (They were free for everyone at Vanguard until July 20, 2017.)
You could keep a Navy Fed checking account and write a check to pull money out. Getting a check in is a bit more problematic, though it doesn't cost much. A mere 55¢. When it absolutely, positively has to be there in a fortnight.