Monday, August 18, 2014

NASA FCU's Surprising CD Disclosure

Bankaholic recently reported on a surprising disclosure related to NASA FCU's share certificate or certificate of deposit (CD) rates.

The disclosures stated the following regarding CD rates: “The rate will not change during the term of your certificate unless the Credit Union notifies you at least 30 calendar days prior to any rate decrease.” (emphasis added)

Here is a link to the certificate terms and conditions disclosures.

In other words, NASA FCU can lower the rate on an outstanding fixed-rate share certificate without the approval of the member as long as it provides such a notice.

This clause does not seem to be in the best interest of the member.

The blogger reminded consumers that they should "review this legally mandated summary of terms in advance of establishing an account with a new institution."
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5 comments:

  1. AnonymousAugust 18, 2014 at 11:33 AM

    First of all, this is consistent with the Federal Credit Union Act (which prohibits guaranteeing dividends or a dividend rate) and the Truth-In-Savings Act (which was imposed on credit unions because of bad actions by banks). Second, if the rate falls at renewal, 30 days notice is required before such on share certificates (FCUs are prohibited from offering CDs).

    ReplyDelete
  2. AnonymousAugust 19, 2014 at 6:58 AM

    If a federal credit union can't guarantee the dividend - don't they have to disclose that? Isn't that what Truth in Savings means?

    Here's part of the disclosure from another federal credit union's website.

    All accounts described in this Truth-In-Savings Disclosure are share accounts. ... For Fixed Short-Term Certificate, Fixed Intermediate-Term Certificate and Fixed IRA Certificate accounts, the Dividend Rate and Annual Percentage Yield are fixed and will be in effect for the term of the account.

    It goes on, but nowhere does it say they don't have to pay the dividend because they are a federal credit union.

    ReplyDelete
    Replies
    1. AnonymousAugust 20, 2014 at 7:47 AM

      There's truth in savings and then there's simple honesty.
      Guess credit unions and nasa not quite the white knight they pretend to be.

      Delete
  3. AnonymousAugust 20, 2014 at 12:13 PM

    Please read NASA FCU's TIS document. If you cannot not, then this should answer your questions about "honesty."

    Declaration of Prospective Dividends: Dividends are paid from current income and available earnings of the Credit Union after required transfers to reserves at the end of the dividend period. The dividend rate and Annual Percentage Yield (APY) reflect the earnings the Credit Union anticipates having available for distribution. Rate: The dividend rate on all dividend-bearing accounts is a variable rate. The dividend rate and the APY are disclosed monthly on the Credit Union’s website. The dividend rate and APY may change every month as determined by the Credit Union’s Board of Directors in its sole discretion.

    It's all there. And fully disclosed being one of the differences between banks and credit unions.

    ReplyDelete
    Replies
    1. AnonymousAugust 20, 2014 at 4:16 PM

      Is the member told at time of deposit?
      If not verbalized, then "did you read the disclosure" at time of change (and complaint) will be considered:
      Ok?
      Adequate?
      Legal?
      Legally shady?

      Delete

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