I was shopping around for a financial institution to open a Roth IRA now that the savings are starting to build. I've decided I wanted to open the IRA at a bank rather than a brokerage firm because I still prefer to visit the banks once in a while because there is something about the inside of a branch that makes me feel warm and fuzzy.
I was getting fed up with banking at WAMU because their locations are not as convenient for me for branch visits as well as ATMs. I've been with WAMU since they came to California by buying out Home Savings of America (Savings of America outside of CA and Ahmanson's elsewhere. Before that, I've been with Home Savings of America since my employment since college.
Last year, I started shopping around for a new bank and noticed that Citibank was expanding their presents in my neighborhood. They were offering a great rate on a savings account so I moved some money over there with an online checking accounting and e-savings account. It was nice to put some money into Citibank and have more convenient ATM's because 7-Eleven ATM's are Citibanks. I just funded a 6-month CD at Citibank just because it was a good rate, but after that 6 months, I will need to make a decision.
A couple of years ago, I was given a membership to a local credit union when I purchased and financed a used car. I was given $5 to open a shared account at the CU as well as a free annual membership to the Surf Riders' Association. Then I was offered $50 to open a checking account at the CU, which I did. I didn't use the services of the credit union much. I just had a portion of my direct deposit there so I can make transfers to my car payment.
So as I shopped around for a bank to open a Roth IRA, I noticed that WAMU charges an annual trustee fee for their IRAs. I noticed that Citibank didn't, and out of curiousity I checked Bank of America online and they didn't charge a trustee fee either. From when I was a new accounts rep, trustee fees for IRA were a norm and there wasn't a way around it. I guess competitive need for customer changes things.
I'm just not going to look into ING anymore because I know they are playing games with Fed to see who can drop their rates faster.
I browsed around my CU's website and noticed that they don't charge a trustee fee either for a Roth IRA, but that shouldn't be a real surprise because CU's hardly charge for anything. I decided to see what my CD options were and the rates are a whole percentage points better. Besides that the CU tends to be more crowded than Citibank and WAMU on Saturdays, but I am seriously wondering why I am not considering banking at the CU. I know some say that they are not FDIC insured but they have a different insurance protection.
I know within the next year, I plan to have the car loan paid off, so I will have to decide to either keep the Citibank or the CU relationship.
What say you fellow savers? Your preference of credit unions or banks?
Banks vs Credit Unions
January 18th, 2008 at 08:14 pm
January 18th, 2008 at 09:27 pm 1200691650
January 19th, 2008 at 04:00 pm 1200758401
"Deposits are
insured through the National Credit Union
Administration, whose programs resemble those
of the Federal Deposit Insurance Corporation
(FDIC)."
But it doesn't really matter to me. I keep $0 in my checking there. IT's just not a biggie. I do not know much about NCUA, but I am sure it is fine. For one, I would imagine a non-profit CU to be MUCH less likely to go under than a bank anyway.
I keep my bigger savings in high-yield online banks. But I have always loved CUs for the convenience and absence of fees. For checking and everything I Would need locally.
There are some really crappy CUs out there, so it all depends. I have never seen a bank I Would bank at though. I have seen a lot of great (low-cost/high-return) CUs. So that is my perspective.
January 20th, 2008 at 07:00 am 1200812421
However, I don't think banks and credit unions are the ideal place to open an IRA. As you may already know, IRA is just a tax shelter, but it does not determine how the money within that shelter is invested. As such, conventional banks and credit unions are only limited to... CDs actually, for use as investments in the IRAs (and is also the reason why IRA rates are suspiciously similar to CD rates).
Unless you're someone with a low risk tolerance, is only using a properly allocated portion of your portfolio, and is perhaps retiring soon, bank IRAs simply don't make much sense to me. Instead, I highly recommend checking out major investment brokerages for your IRA needs.