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.