Episode 10: Pocket Change Podcast
Is your money protected? That’s an important question to ask. Put your trust in a financial institution that has safeguards in place to protect your money, minimize your risk, and maximize your rewards.
"If you're concerned about insurability. And there's more than likely a way to structure that account in a way to get you fully protected."
Summary
On this episode of the Pocket Change Podcast, Seth Rudd, Chief Financial Officer of Leaders Credit Union talks about the importance of working with an insured credit union or financial institution.
Seth discusses the significance of ensuring that your money is safe and insured when depositing it in a financial institution. The insurance coverage for deposits is up to $250,000 per depositor based on the ownership structure of the account, which means a family of three can be insured up to $2.5 million if structured correctly.
The episode also highlights the differences between federally insured banks or credit unions and online-only banks in terms of regulation and transparency. Seth talks about the financial strength and safety of Leaders Credit Union and recommends the Fast Forward account, Champions High Yield Savings, and certificates as safe ways to grow savings. It is important to do your research and seek advice from financial experts to ensure the safety and growth of your savings.
"The insurance is structured the exact same way as FDIC insurance. You are covered $250,000 based on the ownership structure of the account. So, if you have an individual account that's $250,000. If you have a joint account, that's $250,000. Now, with that, let's take a mother and a son. That's $250,000. The same mother with a daughter."
Key Takeaways
- FDIC and NCUA insurance provide coverage up to $250,000 per account ownership structure (individual, joint, trust, etc.)
- By structuring accounts correctly, you can be insured up to $2.5 million.
- Leaders Credit Union is financially strong and was named one of the top 100 credit unions in the country by S&P
- The Fast Forward account is ideal for beginner savers, while the Champions High Yield Savings and certificates are good for more established savings.
Leaders offers a range of financial services and products to help members manage their money, save for the future, and achieve their financial goals. With a focus on financial strength and safety, Leaders provides federally insured accounts and invests in members through educational foundations, technology, and competitive rates.
Whether you're just starting to save or looking for ways to grow your wealth, Leaders has options to suit a variety of needs.
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Full Transcript
Shea:
Hey, this is Shea.
Mary Helen:
This is Mary Helen.
Shea:
Welcome to the Pocket Change podcast.
Mary Helen:
Where you'll learn better ways to spend, save, and invest and take control of your financial journey.
Shea:
Mary Helen, in the news, there's been a lot of talk and discussion about the recent bank failures, and consumers have concerns about, you know, insurance surrounding their accounts and different ways to really safely grow your money. So we're going to dive into that a little bit today.
Mary Helen:
And I think it's an important topic because this is money that people have saved up. It's important to them and they want to know that they're protected.
Shea:
This isn't just pocket change in some cases.
Mary Helen:
That's right.
Shea:
We want to make sure everyone knows how to protect their money and grow it safely so that it can be there to serve them and their needs in the long run.
Mary Helen:
Absolutely. We are so excited to welcome our guest. Seth Rudd, Chief Financial Officer of Leaders Credit Union. Thanks for being here today.
Seth Rudd:
Thank you. Thanks for having me.
Mary Helen:
So tell us a little bit about your background and what you do for Leaders.
Seth Rudd:
I was born and raised here in Jackson, went off to college where I met my wife, and we decided to move back to Jackson and start a family. So we have been here ever since. Now, I've been with Leaders since 2013 in the CFO role, so I'm coming up on ten years in this position and it is hard to imagine that that.
And so my main role is obviously accounting. So I take care of our reporting, making sure that our board is receiving accurate information also are regulators and then also compliance, internal audit, legal. So making sure we're operating within the rules that govern financial institutions and then also electronic banking. So that would be A.C.H., wires, debit card transactions. And those girls do a great job of taking care of our members.
But where I spend the majority of my time is in balance sheet management, making sure that we are growing safely, that we are growing in a way that is sustainable, that we are not just profitable today, but profitable in the future for the next 20, 30, hopefully 200 years when we're all long gone.
Shea:
Well, I know that it's a huge task and a big job for you and your team, but we know that you'll do a great job leading us and growing leaders to the way to best serve our members. And so, you know, with the recent bank failures in the news, how do everyday consumers know that their money is safe.
Seth Rudd:
First off, I would say, know that every deposit holder that has been fully insured has never lost a penny in the history of the United States. If your deposits are fully insured by either the NCUA or the FDIC, you will not lose a dime.
Shea:
And the NCUA is the credit union regulator, National Credit Union Administration.
Seth Rudd:
Correct, it is the insurer for credit unions. The second thing I would say is know that we're structured very differently than the two financial institutions that we've heard about. They were really focused on fintechs. Their primary customer were venture capitalists, large tech companies. I think, one of them, their average deposit size was almost $5 million.
Shea:
That’s my average deposit.
Seth Rudd:
And we're focused very differently. You know, we have 70,000 members mostly in West Tennessee. Where we are most successful is with individuals and with families. We want people to have checking accounts, savings accounts, need a car loan and maybe a small business. That's where we are most successful. And then third, I would say do your research. You know, take a look at these financial institutions.
All of our information is public record. It's released every quarter. And you're welcome to dig in and see what you see for yourself.
Mary Helen:
So credit unions are federally insured like banks are? Speak a little bit about that.
Seth Rudd:
Yeah, the insurance is structured the exact same way as FDIC insurance. You are covered $250,000 based on the ownership structure of the account. So if you have an individual account that's $250,000. If you have a joint account, that's $250,000. Now, with that, let's take a mother and a son. That's $250,000. The same mother with a daughter.
That's an additional $250,000. And that same mother, if she has a trust account, that is also an additional $250,000. So if you have a family of three structured correctly, you could be insured up to $2.5 million. So the key there is make sure you're doing your research. Make sure you come in and see our financial champions.
If you're concerned about insurability. And there's more than likely a way to structure that account in a way to get you fully protected.
Shea:
So that's per depositor basically. That's great to know because I think a lot of people just hear the amount, but we don't realize it's per depositor for that. So that's, that's a great tip to know.
Mary Helen:
So what are the biggest differences between a federally insured bank or credit union and then an online only bank.
Seth Rudd:
With an online only bank, it can be very hard to do your research. It can be very difficult to figure out, hey, is this institution truly regulated? Is it truly insured? You know, that insurance that we talk about isn't free to the financial institution. We pay for that. We also are more regulated. We receive an examination by the NCUA.
Our community bank friends, they receive an examination by the FDIC probably annually every 18 months. We are subject to certain rules to ensure that our consumers know that their money is safe and that we are treating them fairly. With an online bank or an online financial institution, you got to kind of dig around a little bit to figure out if that's the case or not.
Shea:
Yeah, we definitely want to make sure of that for our listeners because they're popping up everywhere. So you want to make sure your money is insured and safe and you know they're for you. So Seth, for the listeners who are member of Leaders or listeners who will become members of Leaders, can you speak to the financial strength and safety of Leaders Credit Union?
Seth Rudd:
Yeah, I'd probably say 2022 was our best financial performance year. We had more capital day than we've ever had in the history of the company. Just recently, a week or two ago, we were named one of the top 100 credit unions in the country by S&P. And so we perform very well financially. We take that money and we continue to invest in our members.
We invest in our members through the Leaders Educational Foundation, by better technology, by better rates, either on the loan side or the deposit side.
Shea:
And so, with the accounts we have, savings accounts, and ways to grow money and really save up for the long term, what are some of the best kinds of accounts that members should put their money into to safely grow?
Seth Rudd:
Yeah, probably my favorite account at Leaders is the Fast Forward account. It's really for our beginner savers, you know, people that are trying to build up that savings account. And what's unique about that account is it's the opposite of what you see in your traditional savings accounts. What you see in your traditional savings account is financial institutions, banks, or credit unions reward you for the more money that you have in that account.
This account is the opposite. You know, we're trying to reward you and pay more to get you started. So your largest rate of return will be for when you have zero or I guess $20 to $5,000. And you can earn that amount just by putting $20 a month in that account. Second, I would say the Champions High Yield Savings. You know, once you have that $5,000 in that Fast Forward, you've kind of moved on to the Champion Saver and then it's more structured like that traditional based on more money that you have.
It also gives you the flexibility to pull money out as you need it. There are some limitations to how often you can take money out, but for the most part that money is fairly liquid. And then third is old school as it sounds, I would say certificates, you know, and a lot of times you hear people talk about CDs or certificates.
I know my grandparents used to talk about CDs a lot, but older I've gotten more that my grandparents did, makes more sense. And CDs are a very safe way to grow your savings and earn more on the money that you've already saved. And then I guess you couple that with the money market account. You know, the money market accounts, a similar product, just a little bit different, but also gives you the ability to earn a little bit more money.
Mary Helen:
So let's talk about the difference between certificates, CDs...
Shea:
Yeah, like CD, like this *holds up CD ROM* a CD ROM? Is that what it is?
Seth Rudd:
A Journeys Greatest hits.
Shea:
Exactly.
Seth Rudd:
No, the difference I guess between certificates and money market, I would say, is access. So with a certificate, you're setting this money aside, you're locking it up for 6, 12, 24 or however many months.
Shea:
I kind of say it's like a time locked savings account.
Seth Rudd:
It's a time locked savings account. That's great. That you can't take money out, but you also can't put money in. Because of that, you're going to earn more than you would in a checking account or savings account. Now, money market is very similar, but the difference is access. So you can have unlimited amount of deposits and you can withdraw only one time a month now because of that you don't earn quite as much as C.D., but you do earn more than checking accounts or savings.
Mary Helen:
And I think it's good that we're talking about this and these different products and opportunities financially, because you don't know what you don't know. And you don't know until somebody teaches you or you talk about this with somebody. And so that's what this podcast is for, is to then, I guess, secure people in knowledge in a way and teach them again what they may not know.
Shea:
Yeah, because a CD ain’t a CD ROM or certificate its a time locked savings account. I've heard the term CD laddering. So is that stacking up all of my CD-ROMs that I have from the nineties or what does that mean?
Seth Rudd:
It is an investment strategy to, I guess the best way to think about it is, to save you from regret or hindsight.
Shea:
Most of these CDs are hindsight.
Seth Rudd:
Yeah, that’s right. Imagine you have $15,000, you go out, invest in a two year CD. What's going to happen six months later?
Shea:
You're going to need it.
Seth Rudd:
You're going to need it or rates are going to go up. Right? And then you're going to regret it. You know, say, “man, I should've waited six more months”. What a ladder does is give you a little bit of protection instead of going out and getting that one CD with all $15,000, you're breaking it up into three different CDs.
Yeah. So maybe you do a three month for 5000, maybe do a six month for 5000 a year for 5000. And then as rates go up or if you need it, CDs are maturing, giving you that availability to either use the money for another CD ladder of some sort or enjoy the new rising interest rate environment.
Mary Helen:
Okay, Seth, I have a fun question for you. If you had some spare change, extra change in your pocket, what would you use it on?
Shea:
New CD?
Seth Rudd:
No, not a new CD. I love Sprite Zero, so I would take that pocket change and go to Zaxby's. They have a wonderful Sprite Zero selection.
Shea:
They’ve got good ice.
Seth Rudd:
They have great ice! And then also the Subway by Kroger on oil well, they have a good Sprite Zero selection as well and they have a great staff. Very friendly.
Shea:
Good to know. There you go. What he would spend his pocket change on Sprite Zero. Some people, Dr. Pepper, some people Coke. Sprite Zero.
Seth Rudd:
Champions of Sprite Zero.
Shea:
Thanks for joining us today on the Pocket Change podcast.
Mary Helen:
And again, thanks so much for all the information that you gave us today and helping our members and potential members become more secure.
Seth Rudd:
Thank you. Thank you for having me. I enjoyed it.
