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.