Dedicated to Deposits: Deals, Data, and Discussion

6.00% 12-Month to 23-Month CD at Patelco CU (Available to All)

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Patelco Credit Union just came out with a new certificate special with a yield of 6.00% APY for terms between 12 to 23 months. You're allowed to select the length of the term from 12 to 23 months. The minimum deposit is $1K and there is no maximum deposit. There's a one-time option to bump up the rate to a rate currently being offered on Patelco's regular 12 to 23 month certificate. The maturity date of the CD remains the same. It requires at least 50% of the funds to be new money. Dividends are compounded and paid monthly. There is a 90 day early withdrawal penalty.

For those who would prefer a shorter term, Patelco is still offering a 5.75% 8-month Super Saver Certificate with an Add-on feature. I had posted on this special in early July.

I doubt the bump feature will be useful. Currently, the rate on Patelco's regular 12-23 month CD is only 5.12%. There would need to be a large rise in interest rates before the regular rates tops 6%, and with the current interest rate environment, it doesn't look likely any time soon. However, you never know what the future will be in a year or so from now. So the bump up option doesn't hurt any.

Patelco has an easy field of membership. If you don't live, work or worship in any of the dozens of California cities that make up part of its FOM, you can be eligible by joining the California Association for Older Americans. According to Patelco: "Anyone can join this assocation, regardless of age or geographic location. Just indicate California Association for Older Americans on your application." I wasn't able to find the website of this association, so I called Patelco about how to join. They can mail or fax you the application. There is no fee to join this association.

Another nice feature of Patelco is that you can apply for membership and open accounts online. However, there's a $20 non-refundable new member fee. A $5 deposit is also required to a savings account. According to the CSR, they do not do a hard credit pull, just a soft pull.

The only negative regarding Patelco, in my opinion, is the lack of NCUA insurance. Patelco is privately insured by American Share Insurance (ASI) up to $250K per account. Patelco is a large credit union with over $3.8 billion in assets. So the chances of losing your money is very minimal in my opinion. However, Patelco has just an average rating for financial strength at Bankrate.com of 3 out of 5 stars (performing).

Comments
6 comments.
Comment #1 by Bozo (anonymous) posted on
Bozo
SafeCU is still offering 5.75% APY for its flex-term CD (available for IRAs as well), terms from 6 to 60 months. The rates were renewed this morning. I'd trust Patelco about as far as I could throw them. If you go with this "other" insurance (NOT NCUA) through Patelco, you'd better do a bit of research. For the ****ant amount of interest you might gain, I don't think it's worth the anxiety.

Just my $.02.

I just customed my IRA CD with SafeCU today, 16 months, 5.75%, so it matures in January 0f 2008, for tax reasons.

Of course, once I hit 59 1/2, this laddering is all irrelevant if rates go up, since I can swap for $25, no early-termination penalty and all that. AARP has a good lobby. If rates go down, I am locked; if rates go up, I can swap up, no penalty. Call me an arbitrageur.

Yours,

Bozo

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Comment #2 by Anonymous posted on
Anonymous
Thank you for bringing ASI to your readers' attention. I was previously unaware of them. Their ESI program is very, very, interesting, as well:

http://www.southmet.com/esi.htm

ASI's use of reinsurance is also a good thing, and distributes risk.

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Comment #3 by Anonymous posted on
Anonymous
I've searched the net as hard as I know how to for negative information, for bad things, regarding ASI. I came up empty. Hope others will post bad information if they locate it. The stuff I found was positive. Anyway, if you are a credit union member in Ohio you'd better like ASI. They insure almost half the credit unions in that state.

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Comment #4 by Anonymous posted on
Anonymous
The membership fee is being waived at Patelco, so no fee to join. Also, Patelco has 11% capital and a sterling record of finacial solvency since 1936.

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Comment #5 by Banking Guy (anonymous) posted on
Banking Guy
Patelco also has a Treasury Income Account that currently pays 5.56% APY with a $25K minimum. See this FW thread for more info on this account.

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Comment #6 by king (anonymous) posted on
king
They did a hard pull when I open a CD. ****.

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