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Patelco Credit Union is Scheduled to be Federally Insured Starting January 1st

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Patelco Credit Union
Patelco Credit Union has announced that it will be insured by the National Credit Union Administration (NCUA) starting on January 1, 2008. Since November 2002, Patelco has been insured by the private insurer, American Share Insurance (ASI). I first reported in October that Patelco had applied to the NCUA for this change. It looks like the approval process went smoothly.

For those who aren't aware of Patelco, it's one of the nation's largest credit union. They have a history of offering great deals on CDs, savings accounts and other banking products. And they're one of the few credit unions in which it's easy for anyone to qualify for membership. For more info on their latest CD deals (including their 5.50% 9-month CD) and on qualifying for membership, please refer to this previous Patelco post.

Patelco listed the following reasons for converting back to the NCUA:
  • The maximum amount of NCUSIF insurance for IRA accounts has been increased to $250,000; this is a substantial improvement in the Federal program.
  • The cost borne by Patelco for deposit insurance through NCUSIF will be lower.
  • Recently, we have found that our private insurance coverage has limited our ability to work with some Federal agencies.
  • Finally, private insurance has not enhanced our ability to increase our branch network through partnerships with other credit unions.

Several readers in my previous post speculated on the real reasons Patelco went with ASI in 2002 and is now going back to the NCUA. In 2002, Patelco had to receive approval by a vote of its members to switch to private insurance. It apears that the change back to NCUA was approved by Patelco's board of directors.

As one reader noted, the way a credit union can dump NCUA insurance is a little worrisome. Members will often vote the way that the board recommends. Most members probably won't hear both sides of the issue. ASI may sound better than NCUA since it covers more, but as one reader mentioned, "who knows if they can really pay up when the time comes." And with the subprime mess, who knows how bad it'll get.

It's important to note that not all credit unions can switch. Credit unions with federal charters (those that have federal in the name) are required to be NCUA insured. Only state chartered credit unions can drop NCUA coverage, and this depends on state laws and state regulators. I do know it's possible for a credit union to change from a federal to state charter. This recently occurred in Georgia at the Credit Union of Georgia. More info on charters is available at this NCUA page (thanks to the reader who provided this info).

As I mentioned in my previous post, I'm glad to see Patelco returning to NCUA coverage. There's something about federal insurance that provides confidence that insured deposits will be covered no matter what the future may bring. But there could be downsides as one reader in my previous post mentioned. It may be easier to attract depositors now with NCUA coverage so they won't have to offer rates as high. Hopefully, that won't happen.

Thanks to the reader who emailed me info on this news.
  Tags: Patelco Credit Union

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Comments
11 comments.
Comment #1 by SVG (anonymous) posted on
SVG
 

Readers,

That's a good news for the members (your truly included) !

We (me and my family) have lots of deposits with Patelco and we always used to hesitate a little before taking advantage of their specials. Come January, we won't have to hesitate, as long as we stay under NCUA coverage limit for our deposits.

- SVG

 

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Comment #2 by Anonymous posted on
Anonymous
For those who currently have CD's in excess of $100,000.which are scheduled to maturity AFTER NCUA Insurance takes effect, it is extremely important to note that those accounts will NOT be 'grandfathered'! Will NO longer be protected by private insurance up to $250,000.per account as they were when you opened such accounts. It is too bad that the two choices for depositors are (1) withdraw the excess funds to place elsewhere at lower rate (2) have faith in the safety of PCU, and allow the funds to remain until CD(s) mature. Neither choice is a win for such depositors. :-(

1
Comment #3 by Anonymous posted on
Anonymous
Other than the very important issue surrounding those term accounts that will be caught in the middle of the insurance coverage transition at a time when rates are falling like stones,it's great news that Patelco member deposits, when properly titled, will once again have the protection & coverage of NCUA Federal insurance.

1
Comment #4 by Ade (anonymous) posted on
Ade
what are their requirements for becoming a member? Thanks. Adela

1
Comment #5 by Anonymous posted on
Anonymous
Good news for me also because I'm a Patelco CU member, been with them for about 10 years. I have a large CD that matures in March and I probably will leave it alone and not worry about trying to change. I also have my IRA's with Patelco and they are paying off regularly with the Min req. monthly distribution.(so you can guess at my age) :)

1
Comment #6 by foglifter (anonymous) posted on
foglifter
Good news!
Patelco offers lots of interesting specials: auto loans, special CD rates etc. What i would like to pint is Patelco's Health Savings Account. It is so far the best HSA offering - 5.12% APY! I took advantage of this account and it works perfectly. You get checks, a debit card, and you can invest your money if you want.

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Comment #7 by Banking Guy (anonymous) posted on
Banking Guy
Ade, for membership info, please refer to this post.

foglifter, thanks for the info on the HSA. I'll have to do post about this.

1
Comment #8 by Bozo (anonymous) posted on
Bozo
Happy, happy, happy.

You could say, I'm happy.

With rates (and lengths) at Wachovia tanking (I so miss my World Savings), I can now motor my maturing CDs right on over to Patelco to keep company with my one CD there. I will keep one modest CD at Wachovia for the safety deposit box freebee, but my serious money will be at Patelco.

Yours,

Bozo

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Comment #9 by Anonymous posted on
Anonymous
Patelco requires new money for their specials. I had a CD due in last August and withdrawn from my Patelco account. Can I take advantage their specials within 120 days? How do they determine if it is new money?

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Comment #10 by Bozo (anonymous) posted on
Bozo
Re: Definition of "new money"

Although I am unaware if Patelco defines "new money" anywhere (externally, to the public, or internally, to its employees), some credit unions do. If you google the phrase "new money" along with "credit union", you will note that many credit unions define what new money is. It's generally funds not then on deposit with the CU. Here's a precise definition from one CU:

"Purchase our special Share Certificate/IRA with new money (a check from another financial institution),. . ."

Hope this helps.

Yours,

Bozo

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Comment #11 by Bozo (anonymous) posted on
Bozo
Re: Patelco does define "new money"

My error. They do define it on their website. There does appear to be a 120 day "out of Patelco" requirement, so one would need to move the money someplace else for four months (not too onerous), then bring the money back with a bank check. Perhaps Patelco views the 120 day requirement as enough of a hurdle so that most "specials" will have enough stickiness to roll into the regular rates on maturity.

Here's the link to their definition if you want to read it yourself:

http://www.patelco.org/accounts/new_money.aspx

Yours,

Bozo

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