Many depositors would like the peace of mind of knowing if their banking institutions are healthy and safe. This is especially important when considering long-term certificates of deposit of, say, five to 10 years in maturity.
The Bauer Group, a national banking-institution rating firm, is providing a toll-free number for people who want to check up on the financial health of their banks, savings and loans, and credit unions.
Consumers who call this number are given their banking institution's star rating for the most current reporting period.
Bauer uses a zero- to five-star rating scale. If the rating requested is below three stars, callers will also be told whether their banks currently meet or fail to meet all federal regulatory requirements.
If the bank or thrift is a program underwriter, the caller receives -- in addition to its star rating -- key financial data on the institution along with a written report if it is desired.
To qualify to underwrite this program, an institution must have either a five-star or four-star rating.
MA To learn your financial institution's star rating, call (800)
388-6686 between 9 a.m. and 5 p.m. Monday through Friday.
The Bauer Group publishes the CD Rate Watch ($99 per year) -- a monthly report that provides the highest CD rates issued by 3 1/2 -star to five-star-rated institutions, in maturities that range from money-market accounts to 10 years.
The CD Rate Watch also includes the penalty for early withdrawal as well as the institution's phone number and contact.
Q: My wife and I want to buy $25,000 worth of tax-exempt bonds. If we commit ourselves for 20 years and need cash before then, are there any penalties?
A: A tax-exempt bond is a marketable security that can be sold any time you want before maturity. The price you get when you sell will most likely be different from the price you paid. It may be higher or it may be lower, depending on prevailing interest rates.
If, at the time you need to sell, interest rates are higher than they were when you bought the bonds, you will have a capital loss. If the prevailing interest rates are lower, you will have a profit, which, by the way, is subject to income tax.
If you only need part of the money, you can sell a few bonds, say $5,000 or $10,000 worth at a time.