Someone Please Explain This One To Me…

[La Jolla Renter]

I called San Diego Diego County Credit Union today to take advantage of their 8 mo Jumbo CD rate of 5.7% APY. As I was giving my application over the phone, the woman informed me that they needed to run a credit check.

I want to put 250k in a CD, not a checking account, and you have to run my credit?

I asked for a reason and she said it is policy. I asked out of curiosity if I happen to have bad credit, would they not take my 250k?

She didn’t have an answer.

Stupid #%*$ Bank, I will take my 250k, and my 780 plus scores somewhere else.

Any Ideas??? Why they do this? and Where I else I can go?

[Diego Mamani]

I simpatize with you. My guess is that since 9/11 there are new regulations and guidance for the banking industry. There was a time when your banker was your friend. Now they are required to vet depositors to prevent money laundering, and inform Uncle Sam if they notice anything remotely suspicious.

[bob2007]

I would stay with them – despite the problem you had, they are one of the easier banks to deal with. They also tend to have the best rates.

[Sandi Egan]

Any bank (or any company, for that matter) would be happy to get your money. I am positive they would NEVER bug you with such stupid requests unless they absolutely have to. I agree with Diego that this must be some kind of regulation.

[DaisyDuke]

Countrywide coincidentally requested this but then I told them to stick it and I went with Wells Fargo. Dang I hope my money is safe.

[La Jolla Renter]

I obviously have no problem giving them my social security number. I am just pissed that I have to have an inquiry on my credit report to deposit money.

It seems utterly #%&* ridiculous that my credit score would be penalized when I deposit 250k into a bank.

Banks will give you money with shity credit and no income, but try to give a bank money and they want to ding your credit.

The irony is priceless.

[kev374]

I thought FDIC insurance is only $100k per account, why are you putting $250k in a single account???

[ucodegen]

Credit report is not required for a deposit.. but social-security/EIN/TIN is.

There is no purpose for the credit check on a CD because you are not dealing with ‘over-draft’ protection. You might want to check with the bank manager of the San Diego County Credit Union you were dealing with. I suspect someone was confused. There are ‘flex’ CDs at some banks that act more like checking accounts.. add overdraft protection and you have a need for a credit check.

Also ask if you are going to be charged for the credit check. (ulterior motive?)

One thing that the credit check could be used for would be to allow the credit union to ‘help’ your debtors.. which is also questionable legally (breaks due process, assumes the bank records are right w/o proof, also allows the banks to drain money directly making fighting them in court harder–how do you pay your attorney?–insidious).

Also see the note on FDIC insurance on a previous post. I would recommend you be aware because the sub-prime meltdown may end up hitting some banks.

[La Jolla Renter]

Jane Smith’s Total FDIC Coverage
Jane Smith Individual Account $100,000
Jane and John Smith Joint Account (50%) $90,000
Jane and Joan Smith Joint Account $10,000
Jane Smith Testamentary Account $300,000
Jane Smith IRA CD Account $250,000
Jane Smith Total FDIC Coverage at ABC Bank $750,000

[Anonymous]

Aw, LJR, toughen up and short the market, man! No girly man CD, sir!

[TemekuT]

The FDIC insurance coverage total is related to the number of individuals. In the case of a trust, the number of trustors and the bequest % to the beneficiaries affects the coverage total. And, the coverage for IRA accounts is different. You can look this up at http://www.fdic.gov/deposit/index.html for comprehensive examples and clarification.

Regarding the requirements to set up a CD, here are my experiences:

1. Countrywide – required, under separate cover 10 days after the account was opened, that we mail proof of our residence address in the form of a house payment coupon copy. They also required extra documentation upon initiation of the account “due to September 11 Federal requirements”. Who knows? Perhaps they ran a credit check on us and didn’t tell us.

2. Orange County Teachers’ Federal Credit Union – no problem, I love my credit union. They allow me to set up and roll CD’s online.

3. Downey Savings – no problem with the set up, which was done recently. No excess documentation or credit check required. We’ll see how it goes.

4. World Savings – no problem with the set up, which was done recently. No excess documentation or credit check required. We’ll see how it goes.

[fsbo]

Diego’s guess is right. As long as you open a new bank account, even if it’s CD deposit, they run a credit check, especially for the big bank, bank of america, citi bank…

[Anonymous]

It could be worse. When I arrived in the US I tried to open an account with BofA. No problem. Tried to get a credit card from Citibank – no problem, they checked my credit back in Canada. Tried to open an ING Direct Account and give them money. Declined – due to insufficient credit history. I called them and told them that a) I wanted to deposit money, not borrow it, and b) I had an account with ING Direct in Canada that had a six-figure balance in it until I came to the US and that I wanted to put about the same on deposit with them. Still declined. Dumb!

[Chris Scoreboard Johnston]

Chris Johnston

Something is wrong with that scenario. I have put larger amounts several times into different places, and never once had that happen. The Bank Secrecy Act is the only thing that I know of since 911 that effects the industry of banking and securities, as far as sources of funds go. That should not relate to this. Go somewhere else.

The other comment about the 250k is a legit one, but if you have a good chunk, you do not want to open 20 different cd’s. I think taking a prudent risk going over the limit, which is going to be raised soon, is ok. Just do not do it with a small bank.

[privatebanker]

What this woman was trying to tell you is that the credit union conducts a “Chex Systems” check on all depositors. If this was indeed what they were referring to, it’s not a full scale credit check and does not appear on your credit report. Some banks however do a “soft check” which allows them to inform you that you are preapproved for one of their credit cards, etc.

[Author]

Posts