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Old 07-16-2008, 03:42 PM
 
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My father is 85 years old and has CDs totaling over $100,000 in one bank with a Bauer rating of 3 stars, and a Bankrate.com rating of 2 stars. Should I advise him to take early withdrawal penalties or sit tight? Opinions welcome.
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Old 07-16-2008, 04:06 PM
 
Location: Great State of Texas
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Originally Posted by BettyJC View Post
My father is 85 years old and has CDs totaling over $100,000 in one bank with a Bauer rating of 3 stars, and a Bankrate.com rating of 2 stars. Should I advise him to take early withdrawal penalties or sit tight? Opinions welcome.
I would not keep more than $100K in any single bank regardless of the ratings.

It's really your call as to take the penalties and run. Is this one of the big banks being mentioned in all the news about being in trouble ?
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Old 07-16-2008, 11:51 PM
 
Location: Durham, NC
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Quote:
Originally Posted by BettyJC View Post
My father is 85 years old and has CDs totaling over $100,000 in one bank with a Bauer rating of 3 stars, and a Bankrate.com rating of 2 stars. Should I advise him to take early withdrawal penalties or sit tight? Opinions welcome.
After seeing the stars, investigate why the stars exist in the first place. 100k+ is a lot of money, so it is worth it to get some clarity and meat behind those stars. Also, contact the bank and talk to them about the rating. If you're cynical, take what they say with a grain of salt, but it is not a bad idea to attempt to get information straight from the horse's mouth.

As far as pulling money out and getting penalized, you might be doing just that out of panic. Of course, based on the information you receive, it may warrant such a penalty, but depending on the penalty, you may just be taking money out of the father's pocket, too. Get all your facts straight and go forward only after you have sought out information and weighed the pros and cons.

Of course, the CD's may be maturing in just a few days, so check on that including the penalties. Me, I wouldn't worry too much about 3 stars since out of 5 stars, that's a basic average. 2 stars, below average, I would be concerned. Again, don't panic.

Never allow emotions to dictate your financial goals (especially the goals of others). Use good common business sense.

However, I agree with the previous poster (and have always done so if I had the opportunity), I would never have more than 100k (or the maximum insured value set by the FDIC) in one insured institution. Unfortunately, I don't have that problem.

Anyway, if you feel comfortable with the information you seek out, then certainly talk to your father about the issue and discuss with him the possibility of allocating funds among a couple of different banks so that they all become insured. That, of course, doesn't mean he'll see all his money right away should a lot of banks crumble at the same time, but insured funds are 'supposed' to be covered (sorry, that's me being a cynic since the insurance backer behind the funds is what I wonder about).
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