Should I Stick With Countrywide Savingslink?

Countrywide Financial is clearly a company in trouble, and why shouldn't they be? They are the nation's largest mortgage originator and we are in the midst of one of the biggest housing declines since the great depression according to Wells Fargo CEO John Stumpf. However, Countrywide also offers the best savings rate of anybody out there with their FDIC insured Savingslink account. I can't exactly afford to lose my savings, but a 5.3% APY is pretty darn good so what should I do about it?

First, determine how much FDIC insurance your account has. This is easy to do by using the calculator available here. The general rule is that each person on the account is insured at up to $100k per institution. So if a husband and wife have a joint account they are insured up to $200k at that institution. My advice is never to put more than the insured limit with any one institution.

Next, think about how willing you are to have your money locked up. If this is money that you could need at the drop of a hat you need to keep it with an institution you are confident with. For me, Countrywide doesn't qualify right now. I think there is at least a 5% chance they could go bankrupt. Wells Fargo on the other hand is as safe as they come (but their savings rates are a lot lower). So the way I view Countrywide right now is that as long as I am below the FDIC insurance limit and as long as I know I don't need the money there tomorrow, it is ok to capture their 5.3% APY. Why am I not 100% confident that the FDIC insured money will be available at the drop of a hat? Because I think if this housing debacle gets really bad and Countrywide and Washington Mutual, and a couple other large banks go under I think it may take the FDIC a little while to sort out their payments. To be fair when Netbank went under the FDIC insured funds were avaiable the next day through ING who bought the accounts, but nonetheless I prefer to be modestly paranoid.