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Navy Federal Credit Union Updates - Eligibility and My Recent CD Issues

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Navy Federal Credit Union
Navy Federal Credit Union has just announced an expansion of their field of membership to include all branches of the Armed Forces. Unfortunately, they didn't expand it to include associations. So unlike the Pentagon FCU (see post), there is still not an easy way to join if you don't have some military connection.

One good aspect of this expansion is that this may increase the competition with Pentagon FCU (PenFed). Now both credit unions cover the entire US military. Even though PenFed has made it easy for anyone to join for the last several years, Navy Federal is still much larger. Here is how they compare in size:

Navy Federal: assets: $35.3 billion, members: 3,051K, Source
PenFed: assets: $11.9 billion, members: 802K, Source

It seems like making it easy to join online is not a big factor in driving membership.

My Experience with a Recent Navy Federal CD

Last year I was able to join Navy Federal to take advantage of a special 6% CD. I was eligible based on my dad's membership. He was in the Navy and receives disability. I described the process of joining Navy Federal in this post. I also described the process of opening a CD.

When a Navy Federal CD Matures

One of the CDs that I opened last year matured a couple of weeks ago. Navy Federal mailed me a form about a month before the maturity in which I could instruct them of what I wanted them to do with the money. Options in the form included mailing me a check, renewing the CD or transfering the money into one of my Navy Federal liquid accounts. I choose to have the money transfered to my share savings account (the account that's required for membership).

My Transfer Plans for the CD Funds

When the CD matured, the CD was closed and the money transfered to my Navy Federal savings account just as I had instructed. After the transfer, my plan was to use my GMAC money market account to initiate an ACH transfer out of the Navy Federal savings account. When I joined Navy Federal last year, the first thing I did was to link my GMAC money market account to the Navy Federal savings account. I was then able to transfer funds from GMAC to Navy Federal with an ACH transfer from GMAC. Once in the Navy Federal savings account, I was able to easily open the Navy Federal CD using these funds.

Problem in the Transfer

The plan for an ACH transfer using my GMAC money market account ran into a major problem. I had neglected the following detail that was buried on page 8 of the disclosure:
Share savings accounts may only receive ACH credits. Checking accounts may receive ACH credits and debits. MMSAs may receive ACH credits and debits in accordance with the limitations set forth in the MMSA agreement.

You can make as many ACH deposits to your Navy Federal savings account as you want, but you cannot do an ACH withdrawal!. I didn't find out about this until I logged into my GMAC account and saw that Navy Federal had reversed my transfer. They also sent me a notice about this in the mail informing me that such transactions were not allowed from the savings account.

So I opened a Navy Federal Money Market Savings Account online, and funded it with the money from the savings account. According to the disclosure, this account should not have this ACH debit limitation.

Make Sure to Confirm an External ACH Debit Will Work

So make sure that you are aware of this ACH debit limitation if you have Navy Federal CDs. I haven't seen this limitation on savings accounts at other credit unions. I'm sure other credit unions may have similar limitations so make sure you check on this if you plan to use ACH withdrawals. From a federal regulation stand point, the only limitation is that there cannot be more than 6 ACH withdrawals per statement cycle. Institutions can have more limitations as in the case of Navy Federal.

Navy Federal's 5% CDs Are Still Available

Navy Federal continues to offer a 5.00% APY 7-year share certificate for a minimum deposit of $20,000 (see Navy's CD page). For the 5-year term, the yield is 4.25% APY (4.40% APY for $100,000 minimum). I'm still waiting on some more of their good short term CD specials like they had last year. For more details on their share certificates and membership, please refer to my post from last year.

  Tags: Navy Federal Credit Union, CD rates

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Comments
9 Comments.
Comment #1 by Anonymous posted on
Anonymous
Woo Hoo; Navy FCU is now open to everyone in the military!

According to Navy FCU President, Cutler Dawson at http://navyfcu.org/dodMessage.html
"We are now offering the benefits of Navy Federal membership to all branches of the armed forces."

Furthermore, he states, "There are two reasons why we are doing this. Today, all branches of our military conduct joint operations and share military installations, base exchanges, commissaries and medical facilities. In fact, Navy Federal already has more than 30,000 Army and Air Force members who, during their military careers, served on a naval installation and have joined our credit union. Now, all service personnel can—no matter where they are stationed."

And finally, he states, "Navy Federal is proud to serve the men and women of the United States Military."

However, if you are an Active Duty, CAC ID carrying (with a listed Pay Grade and Rank on your CAC), Armed Forces of the United States member of the U.S. Coast Guard, paid according to the same Pay Scale as the other four branches of the U.S. Military and subject to the same UCMJ, you are NOT ELIGIBLE to join Navy FCU!

Is the President Cutler Dawson of Navy FCU not educated enough to understand that there are 5 Branches of the U.S. Military.

Because the U.S. Coast Guard has a Law Enforcement role in addition to its Military roles it cannot be part of DOD per the Posse Comitatus Act that DOD is subject to.

Maybe President Cutler Dawson does not realize that the U.S. Coast Guard has been alongside all branches of the U.S. Military for every major conflict the United States has been involved.

Since 1790, the men and women of the U.S. Coast Guard have served as the only "continuous" Naval Service of the U.S. proudly!

NavyFCU, Thanks for forgetting about the U.S. Coast Guard - I'll just take my money and banking business to USAA - who does recognize my Military Rank and Service!

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Comment #2 by Patty (anonymous) posted on
Patty
You don't have to wait til NFCU mails you the form for instructions on what to do with your maturing CD. Go on your account, slick on the share cert and in a box on the upper right click on maturity instructions. I'm always afraid I'll overlook their mailed notice or forget to fill it in, so I fill out the online instructions.

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Comment #3 by Anonymous posted on
Anonymous
I also placed several large amounts of money in the 6% NAVY CD's. Several matured in May and more will mature in June. When they matured I had the funds wired to my home bank. I recently placed most of the money in AARP Jumbo MM. I'm waiting and hoping that NAVY CU will offer something similar to last year and I will again avail myself.

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Comment #4 by Anonymous posted on
Anonymous
I have had a number of CDs with Navy Federal over the past few years. Fortunately, I live about an hour away from a branch and if I absolutely had to move the funds elsewhere I could go and pick up the check. The last time I decided I didn't have time and so when I spoke with a customer service representative over the phone, I was offered the option of having a check Fed Ex'ed to me to receive the following day for a charge of $3.50. It was great. I didn't have to drive there and I would have spent more in gas and time lost going to pick it up. One day's interest loss did not bother me.

I am an extremely satisfied Navy FCU member. Their service reps in the CD department (on their 1 800 telphone number) have been very helpful always and with appropriate identification from the caller have handled some transactions by phone.

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Comment #5 by Anonymous posted on
Anonymous
Re: your experience with ACH debits to the NFCU regular share account -- The same exact thing happened to me within the past week. I had my maturing Navy CD deposited to my share account, then initiated an ACH pull from my GMAC account. I saw my GMAC available balance go up, so I wrote a check that I thought would be covered. But the Navy ACH was subsequently reversed, such that my check was returned NSF by GMAC. This was really frustrating and embarassing. Navy should explain better that ACH debits aren't allowed from the prime share acct, or (better yet) change their policy.

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Comment #6 by Anonymous posted on
Anonymous
I wonder if it's possible to use bill pay to transfer the money out to another party/bank? I'll have to deal with this same problem like everyone else later.

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Comment #7 by Anonymous posted on
Anonymous
Thank you for the warning! I have 3 maturing this month. I also appreciate Pattys comment about taking care of it on line. Since I may be traveling that is a great option which I will look into today.
I learn so much from this site.

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Comment #8 by Anonymous posted on
Anonymous
I AM 37 YEARS OLD MARRIED WITH TWO KIDS.LOST MY JOB IN JUN4 OF 09 AND FOUND A CONSTRUCTION JOB AND WORK SLOWED AND LOST IT IN NOVEMBER. SINCE THEN MY PAYMENTS ARE AMONTH BEHIND. WHEN I LOST MY FIRST JOB THEY WORKED WITH ME AFTER I CONTACTED CUTLER DAWSON CEO OF NFCU.NOW IM IN THE SAME SITUATION AND THEY SAY SINCE I DID AN EXTENSION IN THE BEGINING OF THE YEAR THEY CANT HELP ME.WHAT AM I TO DO. THANKS NFCU FOR ALL THE HELP

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Comment #9 by Capt J.F.Rump USCGRET (anonymous) posted on
Capt J.F.Rump USCGRET
I am a decorated veteran of the USN and retired as a Capt in the USCG.  I do not understand why I and my fellow coasties are excluded from membership.  We are much more alligned with the Navy than the other services except the Marines.  You say it is because we are not part of DOD but you allow membership to CG Academy cadets and Merchant Marine cadets.  I feel it is outrageous and discriminating to exclude the outstanding members of the Coast Guard.  You are lucky when it comes to our life saving missioms that we do not respond to downed Navy flyers because they are not members of Homeland Security.  I would like a response.   Thank you.  John F. Rump Capt USCG Ret

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