Dedicated to Deposits: Deals, Data, and Discussion

Self-Help Credit Union - Unique CDs, Good Rates, Easy Membership

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Self-Help Credit Union
It has been about 19 months since my first report on Self-Help Credit Union (SHCU). Through this time they've maintained competitive CD rates (see SHCU rate table). I haven't reported much on them in the last year since their rates haven't been that great. However, their rates have started going up lately, so I decided it's time for another post. Here are the current CD yields as of June 8, 2007:

Term APR APY
3-month term 4.86 4.98
6-month term 5.14 5.27
12-month term 5.20 5.34
24-month term 5.22 5.36
36-month term 5.26 5.40
48-month term 5.30 5.44
60-month term 5.35 5.50

SHCU Money Market Account and IRA's

In addition to high yield certificates of deposit, SHCU also has a competitive money market account with a yield of 4.68% APY. The minimum deposit is $500. The minimum for the savings account is $25, but the rate is low (currently 0.50%). The SHCU rep said that you could choose to open the MMA account instead of the savings account. So unlike most other credit unions, the savings account isn't required for membership. Also, the rep said that the money market account has check writing (the typical 3 per month limit applies). If you get checks through SHCU, the cost is $8.02 per 50.

The IRA Savings Account has a yield that seems to match the 12-month CD rate. Currently it's at 5.34% APY. The IRA CDs have terms from 12 to 60 months and the rates match those of the regular CDs.

Membership Qualifications

The first thing to note about SHCU is that they have easy qualifications for membership. All that is required is a one-time membership fee of $25 to the Center for Community Self-Help (CCSH), a nonprofit organization. More details are available at the SHCU account open page. This fee can be paid along with your initial deposit by check when you mail in your account application.

The CD Add-On Feature

Update 6/07/08: A SHCU's customer service rep has informed me that they are ending this add-on feature starting July 1, 2008.

Even though SHCU doesn't have the best CD rates, the CDs have the unique feature that allows you to make additional deposits of any amount into the CD during the term. This does not change the term or the rate. The SHCU CD page has the details. So this means you can open a $500 5-year CD, and if rates go down anytime during those 5 years, you can just add money to this 5-year CD. This feature would have come in very handy when rates hit rock bottom from 2001 to 2004. This can also make for a very nice CD ladder. See this post for details about a SHCU CD ladder.

Downsides of SHCU CDs

One downside of SHCU CDs is the penalty for early withdraw. It's more severe than the average CD penalty. The penalty is half the interest for the term of the CD. So for a 60-month CD, the penalty is 30-months of interest. I called SHCU last week for more details and was told that you can withdraw the interest without penalty. The penalty only applies when you withdraw from the principal. Also, the penalty only applies to the amount of the principal that is withdrawn.

Another downside with SHCU is that the CD rates change each business day. Usually they change only a few basis points. But there have been times in which they've dropped by a few tenths of a percent. This could be worrisome if you mail a check since you get the rate of the CD on the day that the check and application arrive at SHCU. It has been reported that SHCU will allow you to include a note with the application stating the lowest rate you will accept on your CD. The commenter Mark in my post from last year said he has done this several times and the SHCU rep has always done what was asked (i.e. call him if rate wasn't high enough, deposit check into a current CD or return the check).

Another way to open a SHCU CD without worries of locking into a low rate is to fund the CD from your savings or money market account. I was told by the SHCU rep that you could open a CD by phone if you fund it from your SHCU savings or money market account. In that way you won't have the mail delay to worry about. To transfer money into the SHCU MMA, you could initiate an ACH push from one of your online banks (like GMAC Bank). You would still have to open the savings or money market account by mail before you could open the CD this way. This would also be a useful method to make additional deposits into an existing CD.

One potential downside of SHCU's CD add-on feature is if this feature changes. Ideally, once you open a CD, you should be grandfathered in. This hasn't always happened with other credit unions. United Services Credit Union in North Carolina had offered a 6.25% 2-year CD last fall which promised the add-on deposit feature. Many readers opened this CD and were later told by the credit union that this add-on feature would end early in the CD term (see this post and comments). Although SHCU has never done this, it's something to consider especially if rates fall like they did in 2001 and people start making the most of the add-ons.

Miscellaneous Account Info

You can open joint accounts, payable-on-death (POD) accounts, custodian accounts and sole proprietorship accounts at SHCU. These designations can be specified in the individual account application (see Open an Account page).

SHCU Background Info

SHCU is federally insured by the NCUA (Charter # 66258). It has $286.6 million in assets and 12,731 members. According to this NCUA data, SHCU has lost quite a few members since I did my first SHCU post in November 2005. At that time the NCUA data showed $184 million in assets and over 16,000 members. SHCU continues to have a 4 out of 5 star Safe & Sound Rating at Bankrate.com. SHCU is based in North Carolina. Branches are located through out North Carolina and also in Washington DC and Oakland, California.

  Tags: CD rates, Self-Help Credit Union

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