Air Force FCU has come out with a very competitive 18-month CD special. Rates range from 2.25% APY for a $100K minimum deposit to 2.00% APY for a $1,000 minimum. The following is a full list of the rates as listed in the credit union's savings rates page as of 7/5/2010:
- 2.25% APY 18-month CD min $100,000
- 2.20% APY 18-month CD min $25,000
- 2.15% APY 18-month CD min $12,500
- 2.10% APY 18-month CD min $2,500
- 2.00% APY 18-month CD min $1,000
These same rates are also available for IRA certificates. The credit union's early withdrawal penalty is a little convoluted:
The early withdrawal penalty will be equal to one half of the dividends that would accrue from the date of the withdrawal to the maturity date applying the contracted rate on the certificate based to the amount withdrawn over and above any dividends credited to the certificate to date of withdrawal.
It has been a while since I last reported on Air Force FCU. My last post was in January 2009. The credit used to offer many competitive CD rates back in 2007 and 2008.
One thing that has changed at Air Force FCU since my previous posts is the field of membership (FOM). The credit union has reduced the size of the FOM. It used to be open to all US Armed Forces. If you click on the credit union's "join us" link and then click on "become a member" link, you can see the full details of the credit union's FOM. In summary, it's now limited to those connected to the military who are working in Texas, Oklahoma, Arkansas, Louisiana, or Mississippi.
Membership application is available online. For those who prefer to visit an office, branches are located in San Antonio, Texas. The credit union is also part of the CU Service Centers which allows you to make several banking transactions at shared branch offices around the nation.
The credit union's ratings for safety and soundness are mixed: 5 stars (superior) at BauerFinancial, 3 stars (performing) at Bankrate.com and an overall health score of 3 out of 5 at DepositAccounts.com (see our Air Force FCU financial overview). These ratings are based on March 2010 data except for Bankrate which is based on 12/31/09 data. The credit union is federally insured by the NCUA (Charter # 8169).
Membership Eligibility Change and the NCUA
This change in the FOM has an interesting history that could be relevant to other credit unions. Last year the NCUA cited Air Force FCU for improper membership. According to the NCUA's letter of understanding and agreement
The Credit Union previously took an overly expansive view of their field of membership that was inconsistent with Section 5 of its charter. As a result, it has accepted share accounts, and extended loans to, individuals otherwise unqualified for membership, which has had a direct effect on the Credit Union's rapid growth and accounts for a significant percentage of its shares and its loan portfolio. These actions have led to our present supervisory concerns about operations and management.
For those who joined the credit union when they had a broad FOM, they may be at risk of losing their membership. Here's the last agreed upon action in the letter of understanding:
The Credit Union, if so directed by NCUA after reviewing the Firm's audit results, shall divest itself of all loans and shares attributable to "unqualified members."
I've seen cases in the past in which people were angered when they were not allowed to join a credit union. This shows why credit unions enforce their field of membership. Also, it shows how members could be affected by credit unions which don't follow their own charters. Based on this example, it appears that members with long-term CDs could find their CDs closed early (I would guess they would get all accrued interest) if the credit union ends their memberships.