A few weeks ago I asked for your opinion of the best high yield savings account and the one thing I learned something very interesting. With interest rates as low as they are, with many banks offering less than 2%, it’s the other services and amenities that dictate which bank you’ll work with.

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Patelco Credit Union is a credit union out in California that was started, in 1936 with $500, to support the financial needs of the employees of Pacific Telephone & Telegraph Company. Since then, they’ve grown to $4 billion in assets, 250,000 members, and now serve over a thousand businesses and communities.

So, why mention Patelco? I mention them because they offer a 7.00% APY new member certificate of deposit that more than doubles the highest rate on my list of best certificate of deposit rates. OK, before you get excited, the New Member CD has a maximum balance of $1,000 and a minimum balance of $1,000 and is, effectively, a $70 bonus for new accounts.

So why bother even mentioning this when most of us won’t qualify to join the credit union?

It’s a little reminder that your local bank or credit union might be the best offer available even if you don’t see it listed on nationally available rate lists. If I was eligible and looking for a credit union, I’d give Patelco a good look. The new member CD promotional offer gets me in the door. The 2.73% APY CD 12-23 months is pretty competitive and their 5.00% APR 30 year fixed mortgage loans is not bad, each probably beats locally available banks in those categories.

I’m not recommending that you open a Patelco Credit Union account (but you should have a credit union account somewhere) but I do recommend that you check your local banks and credit unions to see how their rates compare to the bigger banks, you may see something you like.

For the last few months, until Congress raised FDIC insurance to $250,000, a lot of people were absolutely freaking out about their banking deposits. The largely symbolic move from $100,000 to $250,000 affected practically no one at that point but it made me wonder how the wealthy protected their liquid assets. I didn’t consult with any professionals on this but there are two very simple ways: CDARS (Certificate of Deposit Account Registry Service) and Treasury notes.

CDARS

The Certificate of Deposit Account Registry Service is something that your bank may offer and it can protect your deposits for up to $50 million. The program is very simple and essentially handles the paperwork of opening up Certificates of Deposit at multiple banks. There is a “loophole” in the FDIC insurance in that it covers you for $100,000 ($250,000 until December 2009) per person per institution. CDARS offers $50 million in protection because they open up CDs at multiple partner institutions. You could do it yourself, but they are simplifying the process and likely taking a little bit in interest to pay for expenses and make some money (I wonder how those rates compare with the best CD rates I’ve found?).

Treasury Notes

All Treasury Notes are backed by the full faith and credit of the United States government. Should that level of infinite insurance fail, the dollar would be worthless and your last concern would be over your deposits! We saw many institutions rush to put their money in short term notes when the credit crisis hit its apex a month or so ago and that was because those notes are protected 100%. As a consumer, you can buy Bills, Notes, Bonds, and Treasury Inflation-Protected Securities (TIPS) through Treasury Direct, the Treasury’s online management system.

For people like you or me, opening up a few high yield savings accounts will probably be sufficient to cover our liquid asset protection needs.

(Photo: refractedmoments)