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Velocity Credit Union Extends CD Promotion - CD Application & Deposit Insurance Issues

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Velocity Credit Union

I was surprised to see that Velocity Credit Union extended its CD promotion. Its very competitive promotional CD rates are now available through November 30, 2011. The promotion was originally scheduled to end on the 21st. Velocity has done similar extensions on past promotions, but in this current interest rate environment, I thought it would be less likely for an extension.

The three promotional CD and IRA CD rates are:

  • 1.51% APY 2-year CD
  • 2.12% APY 3-year CD
  • 2.83% APY 5-year CD

Minimum deposit is $5,000. These rates are listed in the credit union's promo page as of 11/19/2011. Since these are specials, Velocity's Elite Reward rates do not apply.

Issue with Velocity's Online Application

Velocity has an online application; however, they can't customize it for promotions. A reader emailed me his experience with Velocity and its online application. Here's an excerpt:

To get the promotional rate, you can't open the CD online. The website setup is very poor, because the link from the promo takes you to online enrollment, which indicates a 2.32 rate. I called to confirm that you would in fact get the promotional rate, and the CSR said yes. I called the next day to confirm, and was told that the information was incorrect; my CD had been set up at 2.32. They gladly changed the rate, but the key is that I had to ask for it. IF YOU OPENED A CD ONLINE, BE SURE TO CALL IN TO CHECK. What you have to do is get the funds in a share savings account, and then phone to open the promotional CD.

Update 11/21/2011: A reader reported opening the 5-year CD on Thursday using the online application. When the reader logged in, he noticed the new CD was showing the standard 2.32% APY instead of the promo 2.83% APY. He sent a secure message, and he just received this reply which he forwarded to me:

Thank you for your message Mr. *******. Since the certificate was just recently opened we have to wait to ensure the funds have been verified and then we manually edit the rate to the 2.83% APY. If you have additional questions please contact member services at 512-469-7114.

For more details about Velocity Credit Union and its CDs, please refer to my last Velocity Credit Union CD review. I have the details about the early withdrawal penalties and membership eligibility. Anyone can qualify for membership by joining an association.

The credit union is federally insured by the NCUA (Charter # 68359).

Risks of Private Deposit Insurance in the Future?

There is some concern that Velocity may try again to switch to private deposit insurance. As I described in September 2009 Velocity's board of directors approved the decision to switch its primary deposit insurance from NCUA to private ASI. The board and the management were able to get the members to approve it in a vote. At the start of 2010 it looked like the switch was a sure thing. Then the board changed its mind due to the higher premiums that ASI was charging credit unions. Thus, Velocity remains federally insured by the NCUA.

If Velocity decides again to switch to private deposit insurance, what happens if they do switch? What rights do members have who did not want to switch? I looked into this question in this September 2009 post. NCUA rules require credit unions to allow members to make penalty-free early withdrawals from CDs. Here's an excerpt from the NCUA rules

The credit union will, at any time before the effective date of conversion, permit all members who have share certificates or other term accounts to close the federally-insured portion of those accounts without an early withdrawal penalty.

My guess is that Velocity won't try again to switch to private deposit insurance. After back tracking in 2010 after spending all of that time and money to win the vote of the members, I can't see them trying again.

It should be noted that not all credit unions are allowed to switch to private deposit insurance. In my 2009 review of credit union private deposit insurance, I described which credit unions are allowed to switch.

  Tags: Velocity Credit Union, CD rates, IRA rates

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Comments
29 comments.
Comment #1 by Saver posted on
Saver
I finally was able to obtain a three year IRA CD at the promotional rate but it took a lot of time and hassle and some cost in order to be able to do so.  The online membership application process went fine.  However, I then had to fill in an application for an IRA savings account.  After I had filled in the form and faxed it to Velocity, I found out that their representative had told me the wrong form.  Instead, the form had to be mailed me which took several days.  By the time I received it, there was only a week left in the promotion so I had to send it back by overnight FedEx which cost over $30.  Velocity was also supposed to mail to me an IRA transfer form which I never received.  Fortunately, I was able to wire transfer the funds ($20 cost) from the other bank without a transfer form, and Velocity received the funds that same afternoon.

I had asked Velocity if they could fax or email the forms to me, but they insisted that the forms had to be mailed  because they were carbon copies.  In contrast, another credit union with which I was dealing at the same time sent me its IRA savings application and transfer forms by email, and I was able to get all of this taken care of within one day without having to incur FedEx charges.  In all fairness to Velocity, they say that they have been inudated with calls because of this promotion.

Despite all this hassle and expense, it was well worth the effort.  Before this promotion, the best 3 year CD rate I had found was two percent.  Shortly before my IRA CD matured, the credit union offering that rate reduced it to 1.75 percent.  Thanks to Ken I found an even better rate than what I have been hoping for.

 

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Comment #2 by Anonymous posted on
Anonymous
Does anyone have any suppositions as to  why velocity is going through such lengths to get new customers with ithis promotion?

 

1
Comment #3 by Anonymous posted on
Anonymous
I opened five CDs last week and have one pending funding verification.  If the CD numbers they gave me represent a consecutive numbering system, there were only 107 CDs opened between my first (funded Monday) and my fifth (funded Friday).  Of course, I don't know whether account numbers are consecutive.  Maybe lack of demand, stemming from the difficulty of the process, or an attempt to rectify application glitches, explains the extension to 11/30.  After a very rough start, my subsequent applications have gone smoothly.  I have my fingers crossed, though.

1
Comment #4 by Anonymous posted on
Anonymous
Velocity is a pain in the neck.  The whole application process to get the promo rates seems extremely unprofessional.

I have $100,000 I would like to invest, but I feel very uncomfortable investing with such a disorganized (possibly dishonest) financial institution for a five year term, and I wonder how difficult it will be to get my money back when the CD matures.

4
Comment #6 by Anonymous posted on
Anonymous
#4   I just opened one at Velocity thursday and have to admit the opening of the CD is strange but I have other CDs coming due and I 'll worry about closing it in 5 years not now.  They said it can take up to 72 hours to open the CD so if you check back here on Monday or Tuesday I will post what happens with mine.

2
Comment #5 by mitad y mitad (anonymous) posted on
mitad y mitad
to 4 bonds and class c mutual funds why  to go

1
Comment #7 by Anonymous posted on
Anonymous
I have dealt with Velocity in the past. They are nice folks to deal with - however their systems are a little cumbersome.

Doubt that they will try ASI conversion again. ASI has had to raise the rate they charge CUs for insurance - thus ASI no longer makes sense for CUs. ASI insurance instead of NCUA insurance never made sense for members.

2
Comment #8 by Anonymous posted on
Anonymous
I just opened one CD last week. The customer service is very nice, but their online system does suck. You need to be patient to wait for the account open.

 

2
Comment #9 by Anonymous posted on
Anonymous
I live about 4 hours from Austin & I am wondering if anyone has opened a Promo CD at Velocity in person  & if it was completed in 1 day . My local bank is offering 2.0 %  for a 5 year CD so a 4 hour ride would be worth it in my case . Thanks

1
Comment #10 by Saver posted on
Saver
To #9.  The respresentative to whom I spoke on the phone said that CDs for walk-ins were being given first priority in terms of actually opening the CDs.  You may want to call to verify this.  However, they are honoring all other CD applications and give the date the funds are received.

2
Comment #11 by Anonymous posted on
Anonymous
I finally was able to open a 5-yr CD at the promotional rate.  The online system is very bad, so I ended up wiring the money in (this was before the promotion deadline was extended) and dealing extensively with customer service.  However, the customer service representatives are very nice and easy to work with.  So depending upon the amount you are investing, the difference in income with the promotional rate may be worth the extra effort.  It was for me. 

1
Comment #12 by ncome tax deduction (anonymous) posted on
ncome tax deduction
could the fee to wire the money be used as a deduction on ones income taxes? as an investment expense ?

1
Comment #13 by Velocity Credit Union (anonymous) posted on
Velocity Credit Union
Thanks for your comments.  We'll address your questions and concerns below.

As to why the promo rate is not shown on the online application:  The application defaults to our standard rates due to the $1000 minimum deposit requirement on our everyday certificates.  The promo rate is valid only for deposits of $5,000 or more.  Once the $5,000 certificate is purchased, the rate is manually adjusted at the branch.  We apologize for the current inconvenience.  We are working on an automated fix.

With regard to converting to private insurance, be assured that Velocity has no intention of changing from federal insurance.  We are, and will continue to be federally insured by NCUA. 

Thanks for your interest in Velocity Credit Union. 

1
Comment #14 by Anonymous posted on
Anonymous
Just got off the phone with a representative.  Per the CSR, account can't be opened in the name of a  Living Trust,  the Living trust can't be named as POD, all monies must be first placed in the member saving acct., there can't be any hold on said funds.  If everything is approved by the CU, then you can switch it "to the special cd rate" but must be done prior to the cut off date for the special.  But it's up to the CU to approve everything prior to that date.  If they miss the date, you get the standard rate or ? question on getting the money out of the savings account.  I've opened a lot of CU accounts, never had to gamble whether the account would be opened at a set rate.  This account was going to be for six figures.  Not worth gambling on it.

2
Comment #15 by Anonymous posted on
Anonymous
Fast follow-up to my above comment.  This past Sept., I opened the "great deal (5yr 3.33%)" with U.S. Senate FCU.  Easy, I fax them a complete package, one day later they approved the package and the funds were wired.   There was no gambling with the funds. 

 

 

2
Comment #16 by Anonymous posted on
Anonymous
The information #14 received from a CSR is contrary to what I've been doing--which has worked.  I've set up five 36-month CDs, aggregating six figures, by using the online application process, including ACHing the funds to the new CD accounts from external accounts after verifying trial deposits .  As soon as I input the trial deposit amounts, the CD shows up online with the standard 1.70% rate.  Within an hour or two, it has been changed to 2.10%.  Again, I've done this five times within the last week.  I'm baffled by the different stories I've read here--but I'm going to keep on doing what I've been doing now that the promotion has been extended.

2
Comment #17 by Anonymous posted on
Anonymous
I should have said six CDs--I forgot the one I verified trial deposits for this morning, which now appears--as all my other CDs--showing the deposit having been made and the promotional rate applicable and in effect.  #16

2
Comment #18 by ricsue posted on
ricsue
I had no issue using the online application and funding from an existing checking account at another institution. My acceptance email was received 2 days after the application process, that was on the 18th. After reading the comments above, I called to make sure I received the promotional rate. The CSR answered the phone, checked my identity, and advised that we did in fact receive the promotional rate. I am extremely pleased so far with the process at Velocity.

2
Comment #19 by Anonymous posted on
Anonymous
Does anyone know if Velocity does a hard credit check to open a cd?

1
Comment #20 by Anonymous posted on
Anonymous
I opened a 5 year Velocity CD online yesterday, and it is already opened and funded using their online application.  Very easy.  I completed the online application yesterday; my trial deposits showed up in my linked savings account at another institution today; and I received a confirmation e-mail from Velocity today that the CD is being funded.  I also wrote an e-mail to Velocity to make sure I receive the promotional rate plus confirming that my CD is being funded.  I've already received a reply saying 'yes' to both questions.  A very easy process. 

I'd highly recommend Velocity, this CD opening process was much easier to complete than most.  To the poster that was going to open the CD is person, why?  This happened so quickly and so far smoothly right from my desk.  To posters that had a lot of trouble and hassle, I wonder why.  While the rate is on, go for it, and simply follow their online instructions. 

 

1
Comment #21 by Anonymous posted on
Anonymous
I did not open on line I opened on the phone Thursday and as of today the cd has not been opened.

1
Comment #22 by Anonymous posted on
Anonymous
To # 20 - Glad to hear you opened & confirmed that you were able to get a 5 year CD completely online but I have read on here that Velocity has to send you a paperwork package to fill out & return when finished because they have to have the original . Did you have to do that paperwork package or has Velocity updated their online application form . I am the one who lives 4 hours from Austin & am not going to have time to make that 8 hour ride to get this promo CD so any advice would help . Thanks 

1
Comment #23 by Saver posted on
Saver
You may be referring to my post discussing all the paperwork required for opening an IRA account and transferring the funds to Velocity from the bank where the IRA was originally being held.  For opening a regular savings account, the online application was pretty simple.  I used a debit card to pay the $20 initial deposit - $5 in the savings account and $15 to join the charitable association to become a Velocity member.

2
Comment #24 by Anonymous posted on
Anonymous
To #22, the poster 4 hours from Austin: I filled out the application online and two days later, my account is fully opened and funded.  I verified this with my funding bank just now.  With Velocity, I digitally signed whatever was necessary to open the account , and Velocity will mail me something to sign with my account number, etc.  I didn't have to wait for anything in the mail to open the promotional CD.  I don't know what the other poster was referring to.  This was a very easy process, and from my observation, Velocity is well organized.  I can't log into my account just yet because I don't have my account number, but I've been able to e-mail Velocity and get a quick response about the promotional rate.  Just open it online through the promotional link on the Velocity home page, and I don't see why your opening process would be any different than what I experienced.  Good luck!  And, this really was easy.  I opened an I-Go Banking CD not long ago that was much more complicated.

 

 

 

2
Comment #25 by Anonymous posted on
Anonymous
Opened my CD by phone late last Thursday and as of today the CD is now in my account.

2
Comment #27 by Saver posted on
Saver
My IRA CD was opened on November 23.  The CD was dated as of that date even though Velocity had received the funds on November 17, and a representative had assured me that the CD would be backdated to that date.  I just called Velocity, and they are going to honor the earlier date.  I must say that all my encounters with their representatives have been very pleasant.

2
Comment #28 by Anonymous posted on
Anonymous
One of the most polite customer reps, I have ever interacted with!

1
Comment #29 by Anonymous posted on
Anonymous
I agree with #28.  There were additional glitches with the online application system over the Thanksgiving weekend, but now everything has been straightened out with my new CD accounts, thanks to the help of Velocity's very sympathetic and dedicated CSRs

1
Comment #30 by Anonymous posted on
Anonymous
to #20 & #24 - i am the one who lives 4 hours from austin & I want to thank you for your info & support . I joined Velocity last night (Sunday-28th) & had my bank wire the funds at 10:00 AM this morning. It's now 2:30 PM & I just got off the phone with Velocity & have my CD's confirmed & locked in at the 2.83 % promo rate for 5 years . Very easy & this was the first time I have done this over the internet . Thanks for saving me the hassle of driving 8 hours and waisting gas . There's still time for those who are still thinking about it . Thanks again to #20 & #24 .

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