Update 4/30/2011: The end date of these special CDs have been extended to May 31, 2011.
Velocity Credit Union has recently come out with a new CD and IRA CD special that replaced the 18-month CD special. The new special has two good CD deals: 2.27% APY for 3 years and 1.76% APY for 2 years. Minimum deposit is $5,000. These rates are listed in the credit union's promo page as of 3/7/2011. According to the promo page, this special is scheduled to last until March 18, 2011.
Velocity continues to offer competitive standard 5-year CD and IRA CD rates. The CD rate is 2.73% APY and the IRA CD rate is 2.83% APY. For members who are at least 50, you can qualify for Elite Rewards which can boost these yields from 0.10% to 0.20%. Note, the special CDs aren't eligible for Elite Rewards.
One nice feature of Velocity CDs is a reasonable early withdrawal penalty. According to Velocity's account disclosure, the early withdrawal penalty is 180 days of interest:
For certificate Accounts having a term greater than one year, the penalty imposed will equal 180 days of dividends on the amount withdrawn.
When I reviewed the 18-month CD special in January, I showed why the higher rate of the 5-year CD and the reasonable penalty made the 5-year CD a better deal than the 18-month CD. These new CD specials are a little better deal in this comparison. I did a quick estimate of the effective yields of this 5-year CD if closed at year 2 and year 3. The 2-year yield would be around 2.04% and the 3-year yield would be around 2.27%.
How It Compares?
Compared to other credit unions with easy membership, the best 3-year CD rate is 2.25% APY at Fort Knox Federal Credit Union as of 3/7/2011. The best 3-year CD rate at an internet bank is 2.00% APY at OneWest Bank.
You may also want to compare these Velocity CDs with Ally Bank's 5-year CD which currently has 2.40% APY with a 60-day early withdrawal penalty. If this is closed after 2 years, the effective yield will be around 2.20% and if closed after 3 years, the yield will be around 2.26%. In a previous post I reviewed the benefit of Ally Bank's small early withdrawal penalty.
There's an online application for Velocity membership and account opening via Andera, a common service used for account opening. In the application page that covers eligibility, the bottom of the page states "None of the above apply. I would like to join one of the following organizations." In the select box, Paramount Theater Association is the only one included. There's a $15 fee to join this association, and it appears to be open to all.
In addition to Paramount Theater Association members, credit union membership is open to those who live or work in one of the following Texas counties: Travis, Williamson, Hays, Bastrop or Caldwell. Please refer to their Eligibility Page for the full details. Membership requires a minimum $5 deposit into the savings account.
Credit Union Overview
Branches are located in Austin and Round Rock, Texas.
You might remember Velocity Credit Union from 2009. It's the credit union that tried to switch from NCUA deposit insurance to the private ASI deposit insurance. Early last year, the credit union management changed their minds and decided to stay with the NCUA.
The credit union has an overall health score at DepositAccounts.com of 4 stars (out of 5) with a Texas Ratio of 2.88% (excellent) based on December 2010 data. Please refer to our financial overview of Velocity Credit Union for more details. The credit union is federally insured by the NCUA (Charter # 68359).
Searching for the Best CD Rates
To search for the best nationwide rates and the best rates in your state, please refer to the following tables at DepositAccounts.com: