Dedicated to Deposits: Deals, Data, and Discussion

4.00% 11-Month CD at NASA FCU - Easy Membership

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NASA Federal Credit Union
NASA Federal Credit Union has started a certificate promotion with a 4.00% APY 11-month CD. The minimum deposit is $5,000, and the money must be new to the credit union. This is also available in an IRA and ESA. The funds for the CD must be deposited by August 31, 2008.

As with other recent credit union CD specials, this is not quite as competitive as what many banks are offering. Last year NASA FCU and other credit unions had the best deals on CDs. In the last several months, the best deals have been from banks. As mentioned in this comment in my Navy FCU post, credit unions are historically slower than banks to respond to a changing rate environment. Typically, in a falling rate environment credit union deposit rates are more competitive. They lower rates much slower. Conversely, in a rising rate environment, they raise them slower, thus are often left behind a bit.

Hard Pull

Commenters in past NASA FCU posts have mentioned that NASA FCU has done hard credit pulls via Equifax (which will slightly ding your credit score) during account opening.

Easy Eligibility

In addition to many select employee groups, the credit union's field of membership includes several associations in which anyone can join. The National Space Society is one. The general membership cost is $20. The membership application for the credit union can be done online or it can be printed and mailed. A $5 minimum balance to your savings account is required for membership. Readers have mentioned in this July 2007 post that the online application requires a minimum $25 deposit to fund electronically.

Please note what is stated at the bottom of their Membership page:
Once you become a member of one of these associations and you join the Credit Union, you do not have to maintain your association membership in order to maintain your Credit Union membership.

This is typically true with all credit unions.

Credit Union Overview

Branches are located in Maryland, Washington, DC and Virginia.

One advantage that many credit unions have over banks is better financial health. That seems to be the case for NASA FCU. It has a 5-star rating (superior) at BauerFinancial and a 4-star rating (sound) at Bankrate.com. Both are based on 3/31/08 data. The credit union is federally insured by the NCUA (Charter # 6328). It has $900.5 million in assets and 70,062 members.

Thanks to the reader who emailed me news of this CD promotion.
  Tags: NASA Federal Credit Union, CD rates, IRA rates

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Comments
4 comments.
Comment #1 by Anonymous posted on
Anonymous
There is a daily limit of $10,000 on electronic transfers in and out. So first you set up your share account, then you link to it, then you transfer up to $10,000 into it, the next day you transfer another $10,000 into it, then you open and fund your CD.

When the CD matures, you call them and ask to have the proceeds put into your share account, then ACH it out. If you have a $20,000 CD this will take 3 days (2 for $10,000 increments and 1 for the interest).

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Comment #2 by Anonymous posted on
Anonymous
There is also another association listed that is free of charge to join. It's called the American Consumer Council so you don't have to shell out the $25 mentioned in the post.

They also have been running a promo where check card users have a chance to win one of five $1,000drawings.

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Comment #3 by Anonymous posted on
Anonymous
Questions for you credit union experts.
Why do we have credit unions?
What useful purpose do they provide that banks don't?
How would you best describe their membership requirements? Am I correct in considerating it a complete farce?
Why am I not correct in considering them just a way to operate outside the banking laws?
If the bank and credit union failures esculates [as I think they will] would you rather have your account covered by the FDIC or NCUA? I have seen a few posts concerning how much money the FDIC may have in their lock box but haven't seen anything about what the NCUA has available for claims.
If you have a credit union account why? Is it rates only?
I'm not knocking CU'S but I see absolutly no reason why I would want to join one.

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Comment #4 by Banking Guy (anonymous) posted on
Banking Guy
You have some good questions, and I'll look into writing some new posts to review these issues in depth

Credit unions have two basic advantages over the typical bank. One advantage is that credit unions are not-for-profit because they operate to serve their members rather than to maximize profits. There are also a few banks that are mutual banks in which profits are also given back to the owner/customers.

The other advantage is somewhat controversial. Credit unions get tax breaks in the US that banks do not get. So this can reduce their cost and allow them to provide better rates.

The main drawback with credit unions from a customer point of view is the field of membership. However, as you can see in the case of NASA FCU, FOM's can be pretty open.

This FOM issue and the tax-break issue are things that banks have complained about.

The NCUA is similar to the FDIC in that the NCUA insurance fund, the NCUSIF, is backed by the full-faith and credit of the United States Government (source).

The main reason you may want to join a credit union is to get a better deal. Except for Alliant Credit Union's 3.75% savings account, there are not too many credit unions offering great deposit deals now. However, in the past, many credit unions have had deposit deals much better than what the banks were offering. A good example is a 6.25% APY 3-year CD at Pentagon FCU in January 2007. As a comparison, the best 3-year CD from a bank at that time was only around 5.50% APY.

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