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Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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DETAILSINSTITUTIONAPYMINMAXPRODUCT
Melrose Credit Union2.27%$5k-5 Year Share Certificate
Melrose Credit Union1.66%$5k-3 Year Share Certificate
Melrose Credit Union1.15%$5k-1 Year Share Certificate
Accounts mentioned in this post. Rates as of July 31, 2014

Melrose Credit Union's Competitive CD and IRA CD Rates

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Melrose Credit Union continues to offer some of the best CD and IRA CD rates in the nation. It currently offers the highest 5-year CD rate for a nationally available account that doesn't require a checking account. As I described yesterday, Connexus Credit Union offers 3.00% APY, but this requires an active checking account. Other top CD rates at Melrose include a 2.17% APY 3-year CD and a 1.41% APY 1-year CD. Minimum deposit is $5,000 for regular CDs and $4,000 for IRA CDs. These rates are listed in the credit union's savings rates page as of 2/2/2011.

One downside of Melrose Credit Union is a harsh and confusing early withdrawal penalty. A reader recently emailed me the certificate account disclosure that he received from Melrose. Here's the listed early withdrawal penalty for CD terms over 1-year:

18-60 Months term: Forfeiture of the first 180 days Dividend and a Reduction to the Share Savings Rate at the time of purchase.

The PDF of this disclosure is available here. Please make sure to request the latest disclosure from Melrose before you open a CD.

Membership

Anyone can join the credit union. According to Melrose's membership page:

Since Melrose Credit Union has an open New York State charter there are no geographic or group affiliation field of membership restrictions. So, regardless of where you live or how you earn a living, you may qualify for membership.

Even though Melrose makes it easy to qualify, they don't make it easy to apply. Several readers have commented about problems they had in the application. Please refer to my November Melrose Credit Union CD review for more of these details.

Melrose is located in Briarwood, New York which is in Queens.

Melrose Credit Union has an overall health score at DepositAccounts.com of 5 out of 5 with a Texas Ratio 1.53% (excellent) based on September 2010 data. It's a sizable credit union with $1.35 billion in assets. Please refer to our financial overview of Melrose Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 62005).

Searching for the Best CD and IRA CD Rates

To search for the best nationwide rates and the best rates in your state, please refer to the following sections of DepositAccounts.com:


  Tags: New York, Melrose Credit Union, CD rates, IRA rates

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Comments
34 Comments.
Comment #1 by Anonymous posted on
Anonymous
I confirmed the penalty via email.  In summary - if you cancel a 60 mos CD early, you lose 180 interest and the remaining interest is recalculated  as if the CD were a Savings Account utilizing the Savings rate that was in effect at the time you opened the CD.  In essence, do not open a CD with Melrose unless you are happy with the current CD rate and have no intention of taking an early withdrawal.

7
Comment #2 by me1004 posted on
me1004
As we have discussed in other threads, most institutions include a clause somewhere that allows them to change any terms even in mid-CD. What they might change to no one knows, but many did not think they would make much of a change if any. 

As for the context, it has been becoming more common for people to use a strategy of going into a longterm CD with the idea that they will close early, take the penalty (they would start a CD at a place with a smaller early closure penalty), and still get more than if they went with a shorter term CD.

But consider if the institution were to exercise its clause to change the terms at any time and were to change to what Melrose has -- maybe even cite Melrose to justify the change as perfectly reasonable. Retroactively applying the share saving rate will lose you ALL benefit you hoped for and leave you will less than you would have had in a shorter term CD. 

When interest rates rise, institutions will be under TREMENDOUS pressure to change those terms, rather than find themselves subject to a huge outflow of deposits from early closures by people then wanting to switch to higher rate CDs or who just need their money sooner than the term of the CD.

9
Comment #3 by Anonymous posted on
Anonymous
me1004 - Totally agree with your comments. When the run for the door comes, and it will, there could be some nasty suprises in store for the depositors.  

4
Comment #4 by Anonymous posted on
Anonymous
In all due respect to Ken and others, I think that it is a mistake to assume that the early withdrawal terms can be relied upon.  It may be a poor staregy for savers. I agree with the prior posters.  Reliance on such a clause, if it's not binding on the part of the insitution, could be a big mistake.  By the way, I am an attorney and co-head the the legal dept. of a major regional bank and holding company.

7
Comment #5 by Anonymous posted on
Anonymous
If the cost of allowing mass early withdrawls of CDs becomes too much then the terms will change.  There will be a run on some banks to get these CDs cashed out and those that wait will be left holding the bag.  When multiple banks start changing terms people will try to get their money out ASAP.  Why wouldn't a bank put it in writing if they never plan on changing the terms? 

4
Comment #6 by lou posted on
lou
Listen I don't want to say that banks and credit unions will not change their early payment penalties, but you really have no evidence to base this on. 99.99999999% of banks and credit unions have never done this. Until I see more evidence of what you are talking about occurring, I am not going to worry about it. By the way, I do not purchase cds that have language allowing the bank or credit union to prohibit early withdrawals.  If I listened to you guys, I would not have purchased the 10 year 5% Penfed certificates. That would have been as shame, because it was a great deal.

6
Comment #7 by Anonymous posted on
Anonymous
I think there are two issues here (1) pay attention to the early withdraw penalty terms that accompanies any CD that you may purchase and (2) people convinced interest rates are going back to 80s levels of 10 to 15%.  You should always pay attention to (1), however (2) is not a sure thing.  Japan has 200% debt to GDP or twice the US and their interest rates are still in the ditch on their long term goverment bonds.

4
Comment #8 by Anonymous posted on
Anonymous
I don't know where to post this. I really wish there was a quick link on the home page where one can just post a quick note on an interest rate change. Sorry. It says above to post this kind of stuff in the forum, but there is no quick link there either.

Fort Knox Credit Union lowered their rates. The highest rate now paid for savings account is .9%. The highest rate paid for their money market account is now 1%.

1
Comment #9 by Annette McL. (anonymous) posted on
Annette McL.
lou (#6) is misinformed.  His 99.9999% is based on...what data?   I think that he/we will see many banks and credit unions revise their penalties if rates rise, as is their right (usually).   They will not be concerned about public relations.  My husband used to work for the Missouri State Dept. of Banking and he saw this many times in the 1990s.  He actually tracked this for the department.  The premise that you can break a CD based on the terms in place when you opened it is very very shaky. Sorry lou. 

4
Comment #10 by PRC (anonymous) posted on
PRC
Ken, you should look into this for the readers.

--Paul

1
Comment #11 by lou posted on
lou
Okay Annette, pllease name me at least 3 banks or credit unions that have changed their early penalty terms retroactively. The burden is on you to prove your allegations. i stand by statement that there is no historical proof of what you are talking about.

1
Comment #12 by Annette McL. (anonymous) posted on
Annette McL.
Lou--my husband retired from the MDeptofB in 2002.  He has no access to records now, but they they had many instances of what I am speaking of.  The early withdrawal penalty policy is not binding on a regulated bank or credit union if they use language in the agreement which allows them to modify that policy.  I recommend that you ask this question of your State Banking Dept. or the NCUA and report back to the readers of this blog. You're quite mistaken if you think that the penalty policy is set in stone when you open the CD.  But if you are told otherwise, let us know.

2
Comment #13 by Saul (anonymous) posted on
Saul
Anette is right, they can modify it.  They did it at Coastal Community Bank in 2007, changed it from 6 months to harsher.  Don't depend on what they tell you, it can change.

2
Comment #14 by lou posted on
lou
I didn't say it couldn't change - my question is how many banks or credit unions did it retroactively. My challenge to anyone is name me more than three. I just want to see if there is any historical evidence to back up the claims your making.

1
Comment #16 by Anonymous posted on
Anonymous
lou - If you choose to make a challenge, then perhaps _you_ should first answer the challenge to back up your 99.9999. Seems quite high to me. However, if you are inclined to believe that the banks will not alter their penalty, or early withdrawal provisions, if it is in _their_ best interest to do so in a time where the preservation of their deposits and profitability is in a critical period, then I feel that your thinking and statements are clearly in the minority. And no offense, I just don't agree with you in the slightest.

2
Comment #17 by lou posted on
lou
I don't have a crystal ball and hesitate to predict anything, but I don't know of a bank or credit union that has ever changed the terms retroactively. If a bank changes the terms, but allows you to withdraw your money without penalty or protects exisiting depositors from the changes, then although I am not particularly happy, I can live with this. Again, anyone out there can tell me one bank or credit union that has changed their terms retroactively. Since you guys are predicting armeggedon, this shouldn't be too hard.

2
Comment #18 by Anonymous posted on
Anonymous
BB&T changed their CD terms for ALL CD's, new ones and existing ones, just last year.  I received notice in the mail that the EWP would be changed on my two existing CD's.  They gave 30 days notice.

1
Comment #19 by lou posted on
lou
What terms did they change and did they allow you to withdraw your money without penalty?

2
Comment #20 by lou posted on
lou
I just checked this site and there is no information at all suggesting that BB&T terms changed. Did you have a CD at Colonial Bank, which failed and was sold to BB&T.

2
Comment #21 by lou posted on
lou
Okay, I did further research and found your post where you indicated that BB&T changed the terms to provide for a minimum penalty of $25. By the way, I researched the entire internet and cannot find anyone else confirming this change. Assuming your right ( which I am not until I see more proof) this change is hardly earth-shattering.

1
Comment #22 by Anonymous posted on
Anonymous
lou - Still no clarification or backup or data on the 99.9999? Patiently waiting.

2
Comment #23 by Anonymous posted on
Anonymous
I do not recall your question asking for "earth=-shattering" changes in CD terms.  You asked for any banks who had changed their terms retroactively and BB&T did so.  And no they did not allow me to close the CD with no penalty.  It happened.  Whether or not you believe it is totally immaterial to me.  If you are not going to be happy when someone answers your question, why bother to ask it?

1
Comment #24 by Anonymous posted on
Anonymous
Oh and no I did not have a CD with Colonial Bank.  My CD's were long-standing BB&T CD's.  5 year CD's which had been opened for more than a year. 

1
Comment #25 by lou posted on
lou
Okay, fair enough, but the $25 floor I would assume had no implications for you. I would think that if you broke the CD, you would have owed a great deal more than $25. My larger point is that other than this one case, which was not a material change, credit unions and banks have not ****ed existing depositors by changing EWP without either shielding them from the consequences or allowing them to withdraw their money without penalty. I am sure if this was not true, we would have more ancedotal evidence of this on this board.

1
Comment #26 by Anonymous posted on
Anonymous
Regarding "we would have more ancedotal evidence of this on this board", how long has this board been around?  In recent years, rates have been going down, so there hasn't been a big reason for anyone to break their CDs, and thus no big reason for banks to change their terms.  If rates go up a lot, the situation could change drastically.  I don't have a strong opinion either way; maybe lou's right; but I don't think lack of anecdotes posted here proves much.

2
Comment #27 by Greg (anonymous) posted on
Greg
My belated comment on this interesting thread is that it's likely to be highly bank-specific and critically depend upon the language of the deposit agreement.  If the agreement allows early withdrawals and specifies a penalty – and does not allow the bank to impose unilateral changes – it's difficult to discern any legal doctrine that would permit the bank to change the deal.  Parties to a bilateral contract cannot just announce midway into the term of the contract that they're going to change the deal – to their benefit and the detriment of the other party.

In addition, courts generally apply certain maxims of contract interpretation that tend to favor consumers in cases where the language is ambiguous.

The takeaway, for me at least, is that caveat emptor definitely applies, and one must scrutinize rigorously all parts of the deposit agreement and early withdrawals terms.

 

2
Comment #28 by jshannon posted on
jshannon
Be aware of the Dormant Fee for $50 that applies to their primary share account if no acitivity after a year. You must deposit an additional $1 per year to avoid. A notice will be sent.

1
Comment #29 by Anonymous posted on
Anonymous
CD rates down 10 basis points.

1
Comment #31 by George, Houston TX (anonymous) posted on
George, Houston TX
What exactly does America have coming to it?  In your analysis of America being a "filthy commie country", how did you arrive at your implicit conclusion that America is no longer a capitalistic oriented society?  I would agree with you that America has become increasingly socialistic, but to say that we have now reached the extreme edge of this spectrum seems a little hasty.  Perhaps its the environment that you're immediately surrounded by?

1
Comment #32 by Anonymous posted on
Anonymous
Anon #30 is in need of a laxative.

1
Comment #33 by Anonymous posted on
Anonymous
when usa bank recently went under, customers bank took it over and dropped my cd rate 1/2%.  But i can withdraw anytime w/o penalty

1
Comment #34 by Anonymous posted on
Anonymous
I have a question that will bring this back to topic on Melrose. I want to open a Joint CD so when I filled out my application I selected a joint account. I know they have a $25 min but is that per person? In other words do I need to send them $50 instead of just $25 for both of us (plus the $2.00 fee). I figure someone here might know the answer to this.

 

1
Comment #35 by pearlbrown posted on
pearlbrown
#34, the "joint" refers to the form of ownership of the account.  You will only need to send them $25 but for your own peace of mind call the CU and confirm. 

1