I have personal finance on my mind these days, and a list of questions I want answers to. So I figured why not use my blog to start answering some of these finance questions rattling around in my brain. The first one I am going to tackle is what happens when your bank or credit union goes belly up. I always wondered how the heck that worked and how FDIC insurance works. I hope this article answers your questions as well.
While the risk of your bank or credit union failing is quite slim, it does indeed happen from time to time. Fortunately, the vast majority of banks and credit unions are backed by a government agency and provide protection to you up to $250,000 per institution. While your money may be safe, it is important to understand exactly what happens to your account activities when a bank fails so you can transition smoothly to a new financial institution.
What happens to your money?
According to the FDIC.gov website, the most common and desirable outcome is for the Federal Deposit Insurance Corporation (FDIC) to quickly step in and facilitate a sale to a healthy bank as soon as possible. This is typically done before the failed bank closes causing very little disruption in banking services to existing customers. Bank customers of the failed bank would then have immediate access to insured funds at the new bank and can continue to make withdrawals, write checks, and use their credit/ATM cards as normal. Customers of the failed bank should continue to use their existing branch until they receive official notice from their new bank.
If the FDIC is unable to find a suitable buyer, they simply pay bank customers directly by check, up to the insured limit of $250,000. According to the FDIC website, this process typically begins “within a few days after the bank closing.”
What if you have more than $250,000 at a bank?
If, for example, you have $285,000 at a bank that fails, you would receive $250,000 in insured funds, and a $35,000 Receiver’s Certificate. This certificate would entitle you to be paid $35,000 when the assets of the bank are liquidated. To avoid dealing with liquidation, it is best to not exceed the insured limit of $250,000 at any FDIC insured bank.
What happens to automatic deposits?
Once the failed bank has been acquired by a healthy bank, all automatic deposits are re-routed to your new account at the acquiring bank. There should be no interruption in the automatic deposit of your paycheck or Social Security check, as an example, and nothing you need to do on your end to facilitate this transition.
If there is no immediate acquiring bank, the FDIC will simply find a local bank to temporarily handle all direct deposits and make funds available to customers causing no disruption in services.
What about checks and auto payments?
Typically, when a healthy bank takes over the accounts of a FDIC insured bank, offices seamlessly reopen the next business day and there is no delay in the processing of checks or auto payments.
If you are in a situation where there is no acquiring bank, and are being paid directly by the FDIC, then the responsibility falls on you to make other funds available to cover outstanding checks and automatic payments. According to the FDIC, it will take “a few days” to get a payoff check to you. Therefore it should be a top priority to make other arrangements for banking activities during that time period as not doing so could result in late fees and penalties.
Do the same rules apply for credit unions?
For the most part, yes. A failed credit union that is insured by the National Credit Union Share Insurance Fund (NCUSIF), provides the same $250,000 protection as the FDIC for its members. Once a credit union fails, the National Credit Union Administration (NCUA) steps in to find a buyer. The NCUA will run the failed credit union until a buyer is found. All banking activities will run as normal.
How to protect yourself from bank failures
Unfortunately, the FDIC or NCUA does not announce ahead of time when a bank or credit union is struggling or headed for a takeover. The single best way to protect yourself is to always bank at a federally insured financial institution and abide by the $250,000 limit per institution.
Ask the Reader: Have you ever been a customer at a bank or credit union that went under? If so, how’d it work out?
By Kyle James
Let’s be clear, as we near March it means I have college basketball on my brain. I love a good Cinderella story who ends up shattering everyone’s bracket. I also love figuring out where to find the best shopping deals this month based on consumer trends, what coupons we are given at Rather-Be-Shopping.com, along with March data from years gone by. I have also done the research on stuff that is a terrible purchase in March, many of which may surprise you and go against popular wisdom. The one guarantee I can make is none of these tips will shatter your bracket like UConn and Kentucky did last year.
If you were unable to score a deal on a new HDTV right before the Super Bowl, March is a really solid 2nd option for finding a bargain on a 2014 model, especially from Japanese manufacturers like Sony, Toshiba, Sharp, and Hitachi. The reason behind this has to do with the Japanese fiscal year ending on March 31st. Because of this Japanese electronics manufacturers start slashing prices on 2014 models to clear them out before the end of the month making it a great time to score a deal.
Key stores to check: Walmart.com, BestBuy.com, and Amazon.com.
We have noticed some pretty amazing laptop deals in the last week of February. Look for this to continue through March as well. Many laptops are being bundled as ‘Tax Time’ specials and offering not only a quality laptop, but also a laptop case and flash drive. One that caught our eye was the Tax Time Starter Laptop Bundled with Laptop, Case & USB Flash Drive from Walmart which includes your choices of laptop, case, and flash drive. Laptop brands include Toshiba, HP, and Dell all with a 15.6″ screen with at least 4GB Memory and a 500GB hard drive. Prices for the bundle starts a very affordable $264.
Key stores to check: Walmart.com, NewEgg, BestBuy.com, and Amazon.com.
Smartphones (2014 Models)
March is a good month to consider trading in your old cell phone for a new smartphone as the incentives are pretty darn attractive in March. Many new models debut in January and February which means last generation smartphones will start to see a price reduction and a major reduction if you’re willing to sign a 2-year contract. Also, if you are an Apple lover, BestBuy has a promotion that gets you a “free $50 Best Buy gift card when you purchase and activate the iPhone 6 or iPhone 6 Plus for Verizon Edge, AT&T Next, Sprint Easy Pay or Sprint Leasing.”
Key stores to check: Walmart.com, BestBuy.com, and Amazon.com.
Shop Local Thrift Stores
As Americans get busy with Spring cleaning, they bring a ton of unwanted stuff to the local thrift store. Some people’s trash is another person’s treasure. Hit your local Goodwill or Salvation Army in March and you’ll notice a big up-tick in inventory, much of which is really good quality stuff. Specifically, shop for apparel, home decor, and even gently used furniture.
As we’re stuck in the time of year between the Christmas holidays and Spring break, luggage retail sales are quite sluggish and sellers are currently offering some pretty attractive discounts. For example, eBags.com has their Rockland Luggage 3 Piece Carnival Hardside Spinner Set on sale with free shipping for $149.99 (Regularly $450). LuggageOnline.com also has some sales that can save you some serious cash. They are currently offering select Samsonite, Delsey, and Travelpro luggage pieces for 67% off the original price.
Key stores to check: eBags.com, Luggage Online.com and Macy’s.com.
Winter Gear and Apparel
If you’re in a part of the country still freezing, or need to stock up for next winter, it’s a great time to shop for winter jackets, shirts, scarves, boots, and the like. Old Navy, Ann Taylor, Lands’ End, and American Eagle are all notorious for slashing the prices on their winter apparel in early March. If you have kids who outgrow jackets darn near every season it is also a good time to buy a size up and stock up for next year.
Key stores to check: Old Navy, Ann Taylor, Lands’ End, and American Eagle.
Hotel Booking Deals
In the past few days we have been given coupons for hotels stays booked through Priceline.com, Cheap Tickets.com, Travelocity, and Orbitz. Hotels are looking to book up the summer months now and are offering some nice incentives to prospective travelers. They range from 5% off via Priceline all the way up to a 20% off coupon code via Orbitz.com and Cheap Tickets. If you’re considering planning a summer vacation, right now is an excellent time to book your room.
Key sites to check: Orbitz.com, Cheap Tickets.com, and Priceline.com
Chocolate Lovers Rejoice
With Valentine’s Day in the rear-view mirror and fading fast, chocolate producers are stuck with a lot of unwanted inventory and are willing to slash prices to get rid of it. Look to stock up on the cheap until at least mid-March. Shopping online? Look under the ‘Sale’ category of most candy/chocolate websites for the best deals. For example, the sale section at Godiva offers Valentine’s treats that they couldn’t get rid off at full price for up to 60% off the original price.
Key stores to check: See’s Candies, Harry & David, Godiva.com, and RiteAid.com.
Only real vacuum aficionado would know that new models are released in early Summer every year. This means that retailers start cleaning out (pun intended) 2014 models starting in March to make room. Use this knowledge to your advantage if you are in the market for a new dirt sucker. You can typically get last year’s models for 30-40% less than the original MSRP.
Key stores to check: Home Depot, Lowe’s, and Ace Hardware.
The big months for perfume sales are around Christmas in December and of course Valentine’s Day in February. So when March 1st hits every year we are inundated with new coupons from online perfume sellers. This year is no different and includes 20% off at Perfumania, 21% off at FragranceNet, and 15% off w/ free shipping from Perfume.com.
Key stores to check: Perfume.com, Perfumania.com and FragranceNet
In The Boat or Camper Market?
I was just listening to a local radio station yesterday and the DJ was doing a remote at our local Boat & RV show at the local fairgrounds. He went on and on talking about all the great boat and camper deals currently available. Retailers are keenly aware that March is a great time to get people excited about hitting the lakes and campgrounds in a new boat or camping trailer. So historically they offer attractive deals and sale prices in March. This year is no exception.
Snowboards, Skis, and Snow Toys
As the temperatures start to rise, and the snow starts to melt, the demand for new snowboards, skis, sleds, boots, and the like, drops like an avalanche. Retailers do not want to store inventory for 8 months if they can avoid it and will start slashing prices to get rid of it. REI, for example, just emailed me last week and gave me the heads up on their clearance sale offering savings up to 45% off current season skis and snowboards along with a 20% off any 1 item coupon code. Similarly, Modell’s.com just sent word that their Winter clearance sale has started and when I checked it out I saw deals up to 75% off the original price.
Key stores to check: Sports Authority.com, REI.com, Eastern Mountain Sports, Modell’s, and Moosejaw.
Golf Clubs and Accessories
Warmer weather also means the arrival of this year’s newest and great golf clubs. But those aren’t the ones you’ll want to buy to maximize your savings. You’ll want to start shopping the clearance deals as retailers start offering some pretty amazing discounts in March. I have personal experience on this one. Last March I bought myself a new TaylorMade driver in mid-March for 65% off the original price tag. Who cares if it’s last season’s model as I can duck hook it out of bounds just as well as the 2014 version.
Key stores to check: Golfsmith.com, Big 5 Sporting Goods, and Dick’s Sporting Goods.
And the Things to Avoid in March…
- Wood or Pellet Stoves. Wait until the Summer season when the demand tanks and deals are being offered.
- 4K Televisions. Yes, the prices are still dropping, Amazon.com actually has a 39″ Seiki 4K for $339.99. But name brand 4K are still quite expensive, especially when you consider the lack of 4K programming. Wait until Black Friday for better deals on name brand 4K Ultra HD TV’s.
- Frozen Foods. I saw that March is National Frozen Foods Month and many blogs and sites are touting this month as a great time to stock up the freezer with deals. Whenever a product gets the most publicity (of any kind) it is often the WORST possible time to look for deals. It is simple supply & demand. Demand goes up due to the increased publicity, and since most sellers aren’t idiots, they’re going to look to make a nice profit and raise their prices accordingly or at the very least NOT offer any sales.
- Spring Apparel. If you don’t need new spring clothing you’re much better off waiting until June or July to score clearance deals. Almost all of the coupons we are getting for Spring apparel are for full-priced items only. Avoid full price if you can!
- Lingerie or Tighty Whities. – Does Victoria’s Secret sell tighty whities? Not sure. In any case, wait until early May to shop for lingerie when Vicky Secret typically starts their online Semi-Annual sale.
By Kyle James
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