Why we use VERIBANC®
Since 1981 VERIBANC® guarantees there is No Conflict Of Interest in their safety ratings.
They have never accepted fees or payments to rate any institution.
VERIBANC is the nation's first bank rating service for consumers.
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We GUARANTEE our rates 100%. If an institution has lowered their
rate or withdrawn from the market, we will replace the rate with the highest available rate. |
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- Why should I pay CDRAA a fee for identifying institutions paying high CD rates when other websites and some newspapers offer similar information for free?
Quite simply, we feature much higher CD rates. It turns out that “free” is not so free after all. You just pay in a different way. For example if you were to place $10,000 in a one year CD at the best rate recently claimed by one of our competitors to be at the top of their “100 highest yields”, your 2.26% APY yield would earn you $226. However, if instead, you went with our highest CRRAA institution, the 3.80% APY yield would earn you $380 – more than enough of a difference to pay for your report.
- Why do I care about how an institution is rated when my deposit will be covered by the FDIC?
While the FDIC has an exceedingly good track record in making good on insurance claims following a bank failure, they are not perfect. Moreover, their policy of relying only on the records of the failed bank (Ordinarily they do not accept any material submitted by depositors.) could lead to delays or other problems if the failed institution’s records should turn out to be faulty. Additionally, today’s financial environment has increased the possibility of the agency’s insurance fund (which is backed up by a limited credit line to the US Treasury) running out of money. Many prudent investors, recognizing how easy it is to virtually eliminate possible downstream surprises involved with a government agency, use VERIBANC’s ratings up front and rely on the FDIC as back up.
- How do I know that an institution identified by CDRAA as a high yield payer is real and not a scam?
This is one of the protections resulting from CDRAA’s requirement that all institutions it lists have a bona fide VERIBANC rating based on official U.S. Government Call Report data. This information, gathered by each of the bank regulating agencies, is validated in a highly secure environment against master lists of properly registered filers. VERIBANC obtains this validated data directly from its US government source.
- What happens if, after I purchase a report identifying an institution at which I wish to place a CD, it turns out they will not accept it, or will not honor the quoted rate?
While our daily survey of thousands of financial institutions is followed by several confirmation and validation procedures, we still recognize that there can be disconnects between a bank’s advertising and its deposit gathering departments. This is why we offer our special guarantee that provides you with a replacement report at no charge if, for some reason, the institution in your original report will not take your money.
- Are CDs at federally insured institutions truly risk free?
Of course, nothing is ever completely risk free. However, if an institution fails, the risk to your deposit money becomes completely tied to the performance of the FDIC or NCUA’s then-current payoff policies. (See FAQ 2, “Why do I care about how an institution is rated when my deposit will be covered by the FDIC?”) You can reduce this risk by choosing institutions that are very unlikely to fail in the first place. For example by avoiding banks that receive VERIBANC’s red, no stars rating in favor of institutions receiving a green, two stars rating or better, you improve your annual odds against bank failure by about 1000:1; if you are exceedingly risk adverse, you can restrict your business to VERIBANC Blue Ribbon Banks. This group of banks’ statistical chances of failure are so small that the risk cannot be computed. Most likely it is less than one in 10,000. We believe that by doing business with a FDIC or NCUA insured institution that has a good VERIBANC rating, you have tilted the odds to the point that your banking risk is much lower than any of the other financial risks you encounter.
- Is the NCUA share insurance (for credit unions) the same as the FDIC deposit insurance?
Essentially, yes. The National Credit Union Administration and its share insurance fund, like the FDIC and the bank insurance fund, are both federal agencies backed by the full faith and credit of the US government. All significant legislative provisions (such as the temporary increase in the general deposit insurance limit to $250,000) apply to both.
- How does CDRAA manage to find CD rates that are so much higher than those featured by competitors or published in the media?
We have developed special surveys that, tied in with VERIBANC's complete set of all federally-insured institutions' financial data, return thousands of banks CD rates daily. In conjunction with labor-intensive manual review, we are able to obtain a better representation of the highest rate payers in the country than our competition -- that rely on much smaller surveys or on banks paying to have their rates advertised.
- How do I deal with a credit union’s field of membership requirement?
To do business with a credit union, you must be a member. Some small credit unions are very restrictive, but many make it easy for people living nearby or engaging in a common occupation (like military) or being related to a qualifying family member to join. At some credit unions, anyone can join by making a small donation to a specified charity. When screening institutions, we at CDRAA try to eliminate the most restrictive credit unions. However, this process is a tough judgment call since it involves drawing a line that may eliminate you as an eligible customer from enjoying a high rate at an institution where you might qualify for membership. We suggest that, when you receive one of our credit union reports, you check the membership requirements first. If there is any doubt, call the institution to find out, for sure, if you qualify. If not, simply contact us for a free replacement report on a different institution. (See FAQ 4, “What happens if, after I purchase a report identifying an institution at which I wish to place a CD, it turns out they will not accept it, or will not honor the quoted rate?)
- Why do credit unions use the term “shares” instead of deposits? Does it matter?
Briefly, because your “deposit” in a credit union technically increases your share of ownership in that institution. Most credit unions are quite proud of this fact and that they are “member owned.” In practical terms, however, it is only a difference in terminology. Your shares are treated in the same manner as deposits in a bank.
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