Wednesday, January 6, 2016

Nonmembers Getting Better Rates on Deposits than Members

According to Call Report data, 375 credit unions paid higher interest rates to nonmembers on their deposits than to members at the end of the third quarter of 2015.

The analysis examined reported dividend (interest) rates at credit unions. Deposit accounts examined include nonmember accounts, share drafts, share certificates, money market shares, IRA/Keough accounts, regular shares, and all other shares.

The analysis did not look at the number of nonmember deposit accounts or the dollar volume of these deposits.

The analysis found that the dividend rate on nonmember accounts was higher than the reported dividend rate across all types of member accounts at these 375 credit unions.

Coastline Federal Credit Union (Jacksonville, FL) reported the highest interest rate on a nonmember deposit at 6.8 percent. The best dividend rate on a member deposit was 1.09 percent on share certificates.

Numerica Credit Union (Spokane Valley, WA) had the next highest rate on nonmember deposits. The $1.5 billion credit union reported an interest rate of 3.92 percent on nonmember deposits. The best reported rate to members was 1.42 percent on IRA/Keough accounts.

Twenty-eight credit unions with assets in excess of $1 billion reported paying better rates to nonmembers versus members on deposits.

Large credit unions with more than $5 billion in assets that are reporting paying better rates to nonmembers than members include: Navy Federal Credit Union (Vienna, VA), Security Service Federal Credit Union (San Antonio, TX), First Technology Credit Union (Mountain View, CA), and ESL Federal Credit Union (Rochester, NY).

It is dumbfounding that nonmembers are getting better rates on their deposits than credit union members.

In my opinion, paying nonmembers a better rate on their savings than members is clearly a misuse of the credit union tax exemption.



1 comment:

  1. Since these folks are not credit union members - they must be bank customers. That is wonderful.

    ReplyDelete

 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.