Northrop Grumman Federal Credit Union still has some very competitive certificate rates. Some of the top yields include 4.49% APY for a 6-month term, 4.57% APY for a 12-month term and 4.84% APY for a 60-month term. These require a minimum deposit of $40,000. The yields for certificates with a $2,500 minimum are 25 basis points lower except for the 60-month term which is only 20 basis points lower. Similar rates are also available for IRAs. These rates are listed in the credit union's rate table as of 2/7/2008.
These rates aren't 5%, but they're high compared to what's now available. After the recent massive Fed rate cuts, bank rates are declining fast. The best yield on a one year term listed at Bankrate is just 4.02% APY at Intervest National Bank. The best yield for a 5 year term listed at Bankrate is 4.25% APY at Eastern Savings Bank.
Details of the CDs (what the credit union calls term savings accounts) are described in the terms and conditions. Note the following that's contained in these terms: "The Board of Directors may redeem Term Accounts prior to the expiration of the term upon 30 days notice." I asked the credit union CSR about this, and I was told that this is intended to protect them in a crisis type of situation. According to the CSR, they've never had to use this call feature.
The early withdrawal penalty is 90 days of interest on amount withdrawn for terms of 12 months and shorter and 182 days of interest on amount withdrawn for terms over 12 months. The grace period at maturity in which you can close the CD without penalty is 10 days.
Process to Open the CD
According to the credit union CSR, rates typically change on Tuesday mornings, so these should be valid for the next few days. You can apply for membership online and fund the share savings account using an ACH electronic transfer. However, you can't open the CD at the same time. I was told by the CSR that once you are a member and can access your online account, you should be able to open a CD online. However, it requires that available funds are in your NGFCU savings or checking account. You can also apply for the CD by mail with a check, but they don't guarantee the rate at the date you mail it in. So the two possible options to quickly open the CD and lock in the rate would be a wire transfer into the share savings account and open the CD online or an overnight mail of the check and application. Please check with the CSR on this before applying.
In addition to employees of Northrop Grumman, the credit union's field of membership includes members of the Southern California Historical Aircraft Foundation. The credit union allows you to join this foundation concurrently with your membership to the credit union.
The membership application can be done online (both membership into the aircraft foundation and into the credit union). The link to the online application is at the top left of the home page (Picture with the words "Take Ownership Join Online Now!"). I noticed the following in that application:
Members of the Southern California Historical Aircraft Foundation (SCHAF). If you are not currently a member of SCHAF and you wish to join through SCHAF membership, you will receive a one-year membership in SCHAF concurrent with your lifetime Credit Union membership.
Fees and Other Issues
A reader from my previous NGFCU post confirmed that accounts can be opened online, but was told by a service rep that it's much quicker by visiting a local branch. Another reader warned that NGFCU does a credit check via Equifax which may be a hard pull that will slightly ding your credit score. Some other small downsides of membership were listed in the FAQ of the application. These included:
The only requirement for membership is an initial deposit of $8.00 (includes a one-time $3.00 membership fee).
Members who maintain a quarterly average daily balance or have a total balance in all shares at the end of each quarter of at least $100, or have an outstanding balance on a loan on the same account number during that quarter will be in good standing. Accounts that fall below this minimum requirement will be assessed an account maintenance fee of $6.00 per quarter.
Credit Union Overview
NGFCU has branches in several cities of California, Illinois, Maryland, Virginia, Louisiana and Florida.
The credit union is federally insured by the NCUA (Charter # 24292). It has $601.5 million in assets and 49,235 members. The credit union has a 4 out of 5 star rating (sound) at Bankrate.com based on 9/30/07 data.