SAVINGS: THE FAULT IS NOT IN OUR STARS
By Writer: Jersey Gilbert

(MONEY Magazine) – Naturally you want high rates. You also want safety. So you put your money in institutions listed here that have been awarded three stars by Veribanc, a Wakefield, Mass. consulting firm that supplies MONEY's CD yield tables. But the next time you look, the stars have vanished. For example, Columbia Savings & Loan of Beverly Hills, Calif., which rated three stars as recently as our November issue, appeared in our table last month with no stars at all. What gives? Explanation: Veribanc and other ratings services base their judgments on data that the institutions supply to regulators quarterly -- information they do not get until it is made public at the end of the following quarter. The statistics may be fine. But they may be sloppy or fraudulent -- or simply overtaken by events. In the case of Columbia S&L, the junk bond market crashed last fall, decimating the value of the thrift's large junk portfolio. Given all that, why does MONEY offer Veribanc's star system? Because with very few exceptions, the stars have proved to be reliable. Last year alone, regulators closed 244 of the nation's 16,229 banks and thrifts. But only three of those 244 carried three-star ratings at the time they were shut down. Those odds may be small comfort if your institution fails, of course. But even then, as long as you keep your balances under the $100,000 federal insurance limit, your money is safe. The main risk you run is that your account will be transferred to an institution that reduces your interest rate.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: THE BEST SAVINGS YIELDS IN THE U.S.