BENEFACTOR OF OUR BLESSINGS
Every good gift and every perfect gift is from above, and comes down from the Father of lights.
James 1:17
Words of Wisdom
“A mark of true thankfulness is that we love the giver more than the gifts."
Frans Bakker
INSURANCE MYTHS
Myth: Your money is safer in big banks.
Fact: No one has ever lost a penny of FDIC-insured deposits held in community banks. The FDIC insures deposits up to $100,000 per depositor and $250,000 for certain retirement accounts. If you have more than $100,000 at a community bank, you can still be fully insured if your accounts meet certain requirements. For example, accounts owned by a single person are separately insured from joint accounts or retirement accounts owned by that person. The FDIC’s Electronic Deposit Insurance Estimator (on the Web at http://www.fdic.gov/edie) can determine your coverage.
Community banks focus on the needs of local families, businesses and farmers, and their top executives are generally available on site to answer your questions directly and make timely decisions. Many of the nation’s largest banks are structured to serve large corporations and have CEOs headquartered in office suites, not local banks.
Myth: Your money is stored in a vault at the bank.
Fact: Community bank deposits are reinvested in your local economy. Your money on deposit will be used to make loans in the community that help your neighbors start a nearby business, purchase a home, or send a son or daughter to college. Continuing to hold deposits in community banks ensures the neighborhoods where you live and work will continue to grow and thrive.
Myth: Community banks are undercapitalized.
Fact: The vast majority of our nation’s banks, especially community banks, are strong, safe and stable. Community bankers are common sense lenders that don’t engage in high-risk activities. Instead, they stick to the longstanding fundamentals of responsible banking, and always seek to serve the long-term interests of their customers and communities.
Myth: The recent bank failures mean my bank is at risk.
Fact: Several of the nation’s largest financial institutions have failed in recent weeks. There have been just 11 bank failures this year out of nearly 8,500 depository institutions operating in the United States. That’s less than two-tenths of one percent. There is little chance your bank will fail or be taken over by the federal government. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits.
Myth: Community banks are involved in problems with subprime mortgage lending.
Fact: Community banks are common-sense lenders that have avoided subprime lending.
There is no mortgage-lending crisis for community banks because they are well-run, highly capitalized, tightly regulated and more risk-averse than big banks. Community banks have money to lend homeowners for new purchases and to refinance existing mortgages.
Community Bank Deposit Account Options Questions & Answers
Washington, D.C. (October 2008)—Carrollton Federal Bank and the Independent Community Bankers of America (ICBA) want to reassure community bank customers about the safety of their deposits in accounts with community banks. Here are answers to some questions community bank customers are asking about their accounts:
Q: I’ve heard lately that money market funds are in crisis. I have deposits in a money market account through my community bank. Is my money at risk?
A: There’s an important difference between bank deposits which are insured by the FDIC and non-bank money market funds. Worry on the part of consumers can be attributed to the confusion between money market mutual funds, which have been the subject of recent headlines, and money market deposit accounts, which are the ones you probably own.
Key differences:
- Money Market Mutual Funds are mutual funds which hold short-term debt investments such as low-risk government securities, certificates of deposit and short-term debt issued by public companies (“commercial paper”). These shares are typically sold to investors by brokerage houses and mutual fund companies, and just like any fund that is not a bank deposit, they are not FDIC-insured and there is the potential (though very low) for shareholders of these accounts to lose money.
Nevertheless, under the Treasury Department’s recently announced guarantee plan, amounts shareholders had in money market mutual funds prior to close of business on Sept. 19, 2008 will be insured for a period up to one year, if the mutual fund signs up and pays a fee to be covered.
- Money Market Deposit Accounts are widely available interest-bearing bank accounts. They are essentially savings accounts with higher interest rates. Depositors owning these very safe accounts are FDIC-insured to $100,000, or $250,000 for some retirement accounts.
Q: Isn’t the best course of action right now to withdraw my money and put it “under the mattress”?
A: Absolutely not. In fact, that is the surest way to allow inflation to erode your spending power. Think about it this way—your great-grandfather could have bought an entire meal for a dollar a 100 years ago, but if he’d stuffed that dollar under the mattress for you to find today, you could barely buy a candy bar with it now.
More important, if you keep your money in a bank savings or checking account, the FDIC backs it with insurance, and no one has ever lost money that’s covered by deposit insurance.
Q: Then what should I do with my money? I don’t really like a lot of risk.
A: Fortunately, there are plenty of safe alternative deposit products available at your local community bank in addition to money market deposit accounts, which, again, are quite safe. You should talk with your community banker, but here are some of the most popular:
Certificates of Deposit (CD) are FDIC-insured deposit products with attractive interest rates. Sometimes called time deposits, a CD has to be held and the money cannot be withdrawn until its maturity date (typically three months, six months, or one-to-five years). Depending on the account, you could be assessed a penalty fee for withdrawing funds early, but some banks offer CDs that let you withdraw some of the funds before maturity without a penalty fee. You should check with your community bank, but bank CDs are insured by the FDIC.
Individual Retirement Accounts (IRAs) are tax-advantaged accounts for retirement savings. In the majority of cases, banks offer two-types of IRAs: traditional and Roth. Contributions to traditional IRAs are made with pre-tax assets, but at retirement, withdrawals are taxed as income. Conversely, all Roth IRA contributions are made with after-tax assets; however, withdrawals are usually tax-free. These accounts are FDIC-insured. And, after recent changes in federal law, IRAs are usually insured for up to $250,000 instead of the traditional $100,000 deposit insurance coverage.
Savings Accounts are among the traditional deposit bank accounts. These deposits are FDIC-insured and carry virtually no risk. Because the risks are low, the interest rates you can earn on these accounts also tend to be comparatively low. Unlike a regular checking account, there are monthly restrictions on the number of times you can draw funds from the account, and sometimes you will be required to keep a minimum balance. But savings accounts are an important way to keep funds safe and secure, covered by deposit insurance and relatively easy to access.
U.S. Treasury Securities are the collective array of government bonds, from Treasury bills to U.S. savings bonds. They are regarded as the safest of all investments because they are backed by the U.S. government. In addition, earnings on Treasury securities are exempt from state and local taxes. But they are not covered by deposit insurance.
Q: My spouse and I are combining our money into an account under my name only. Will the FDIC insure each of us for the full $100,000?
A: No. The FDIC insures deposits up to $100,000 per depositor and $250,000 for certain retirement accounts. If you have more than $100,000 at a community bank, however, you can still be fully insured if your accounts meet certain requirements. For example, accounts owned by a single person are separately insured from joint accounts or retirement accounts owned by that person. In this case, you can each have $100,000 insured in separate accounts with one name each, and have another $200,000 insured in an account that bears both your names. The FDIC has information on its Web site (www.fdic.gov) about how deposit insurance coverage works. Or better yet, talk to your local community banker. And remember, no one has ever lost a penny of FDIC-insured deposits held in community banks.
Please click the following link to determine the amount of insurance coverage you have: http://www.fdic.gov/EDIE/
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We are a mutually owned bank that prides ourselves in customer service and giving back to the community, since 1875. With over 135 years in the banking industry we understand the wants and needs of our community. We offer a variety of deposit and lending products to meet our customers every need. Come by today to speak with an experienced member of our friendly staff.
Carrollton Federal Bank is the oldest financial institution in Carroll County.
Our Vision is to continue our long standing tradition of exceptional customer service that meets and exceeds all customer and community expectations.
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