Dedicated to Deposits: Deals, Data, and Discussion
About Ken Tumin About Ken Tumin - Founder and Editor

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.

Featured Savings Rates

Popular Posts

Featured Accounts

Can't Join a Credit Union? Blame Its Field of Membership


Can't Join a Credit Union? Blame Its Field of Membership

I've seen several comments over the years from readers who are confused over credit unions' connections with organizations that they serve. This can be confusing. Many credit unions have names that make them appear connected with some organization. Examples include Navy Federal Credit Union, Pentagon Federal Credit Union, American Airlines Credit Union and General Electric Credit Union. These credit unions were established to serve these organizations that are in their names, but they are not part of these organizations. They are separate entities.

Another important thing to understand about credit unions is that all are required to have a field of membership (FOM) which defines the groups of people who are eligible for membership. Many credit unions were established with FOMs that were primarily limited to employees of the organizations that they were named after. These are known as select employee group (SEG) based charters. FOMs have often been expanded to include multiple employee groups.

In addition to adding SEGs, many FOMs have expanded to include geographic areas. These are known as community charters, and they typically allow anyone who lives, works, worships or attends school in a specific area to join.

In addition to SEG and Community charters, FOMs can have a "common bond" that includes associations. This allows credit unions to include association memberships in their FOMs. As described in this NYT article, it has allowed some credit unions to open membership to anyone in the nation. I list many of these credit unions in my post, The Big List of Credit Unions Open to Anyone.

As credit unions expanded, many have changed their names so that they don't appear limited to just one organization.

Before credit unions can change their FOMs, they must get approval from their regulators. The NCUA is the primary regulator for federally chartered credit unions. Once a FOM is approved, the credit union is required to abide by it. So if a credit union says that you're not eligible to join, don't expect them to make exceptions. Credit unions can get into trouble with their regulators. One example of this occurred at the Air Force Federal Credit Union. The NCUA cited the credit union 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.

One credit union that has angered some readers is Navy Federal Credit Union. It's the largest credit union in the nation, but it's FOM is primarily limited to active and retired military (see Navy Federal's eligibility checklist for full details). Disabled veterans, who are neither active nor retired from the military, have complained that Navy Federal has not let them join.

The interesting thing about Navy Federal is that its FOM used to include "Navy/Marine Corps receiving disability". This might have been removed when Navy Federal's FOM changed to include all military branches. I'm not sure why disabled veterans are no longer in Navy Federal's FOM. Nevertheless, Navy Federal employees have their hands tied. As I mentioned above, credit unions are required to follow their FOMs. Of course, Navy Federal could go through the process to expand its FOM to include disabled veterans. It seems like it would be a small expansion compared to how other credit union FOMs have expanded.

Navy Federal could have become another PenFed when it acquired USA Federal Credit Union which allowed anyone to join via an association. Before the acquisition, anyone could join USA Fed by joining an association. Many readers joined USA Fed before the acquisition, and they then became Navy Federal members after the acquisition completed. Unfortunately, Navy Federal decided to discontinue this common bond feature. So if you missed this backdoor way to join Navy Federal, you're out of luck.

One final feature that's important to know about credit unions is that once you're a member, you don't have to worry about maintaining your eligibility. As long as you maintain your credit union membership (keeping your share account), you can lose your job, move to another area or end your association membership without affecting your credit union membership.



Related Posts

Comments
47 Comments.
Comment #1 by Bancxman (anonymous) posted on
Bancxman
Ken, I was one of the lucky depositors to get a membership in Navy Federal through USAFed. Thanks again for publicizing that connection. BTW, Navy Federal probably discontinued the common bond feature because the charitable organization in question had been organized by USAFed and was run out of the latter's own offices. Navy Federal may have seen that as too controversial a means for attracting new members. I've noticed that other credit unions tend to create common bonds through independent associations. Some of them will even pay the new depositor's membership fee.

9
Comment #2 by Anonymous posted on
Anonymous
Nobody's missing out on anything by not being a Navy Federal member. The union's saving and CD rates have been rock bottom for quite a few years.

8
Comment #3 by Shorebreak posted on
Shorebreak
Years ago PenFed was really restrictive in their FOM. Just being a retired military member didn't make one eligible for membership. That was when they were offering a juicy 6% APY 5-year Money Market Certificate.  Finally they opened up their FOM to members of the Air Force Sergeants Association (AFSA) and that's how I got my foot in the door. One of the tougher ones to get into, which offers great rates, is Security Service Federal Credit Union.

3
Comment #4 by CC (anonymous) posted on
CC
I kindly disagree with Anonymous #2, above. Up until very recently, I was able to tap into some great rates on long-term CDs at Navy FCU.  Only recently (past year) have their rates been outshined by PenFed (where I also have an account).

The main thing I wish would change about Navy FCU (and also PenFed) is that they are NOT part of the shared-branch network of credit unions. Here in Northern California, I have ZERO access to both places, so I have to do everything via ACH transfers and online account management.  There is one branch of Navy FCU in Monterey, but that is 120 miles away, and the branch is on a Navy installation which cannot be accessed by civilians (I am not active duty, but I was able to join Navy FCU because my father was retired military when I joined).

4
Comment #5 by Alan posted on
Alan
Navy Federal's New Car Loans are very competitive at 1.79% for loans up to 60 months.  These rates also apply to late model used cars.  Not many banks/CUs can match these rates.

3
Comment #6 by ytytyt posted on
ytytyt
.

.

Dear Readers,

For years Navy FCU has offered a certificate with 1 year term rate that often surpasses the rates available with certificates of 5 year term. It is called "Special EasyStartSM Certificate".  There are restrications/conditions to obtain this rate, but if one is doing regular business with Navy FCU, then these conditions are not too hard to meet.  In September 2012 Navy FCU had a promotion where they were offering 4% APY for 1 year certificate.  Max amount in certificate per member was 4,000.

Often times Navy FCU offers 0% rate for balance transfer for 1 years to their credit card, and there is no "balance-transfer-fees".  (They have one such offer presently that will expire by end of Feb 2013.)  If one has a big enough credit-line, then surely it is worth to participate in this offer and get the cash for free for about 1 year!  

The way I do this is to transfer the balance from PenFed's card  to Navy's.  And then from PenFed get a "cash-advance" from PenFed's credit card into PenFed's checking.  PenFed has no cash-advance fees if one takes the advance from their credit card to their own checking.  In effect, this gives "free" cash for usage for 1 year!

Yours Truly,
Anonymous

3
Comment #7 by Anonymous posted on
Anonymous
Maybe the oddest thing about credit union membership availability (I'm a member of three, including Navy Federal and Pentagon Federal), is the relative rarity of community chartered credit unions), particularly where I now live--in Raleigh, North Carolina. When I lived in Florida, I could easily join a community-chartered credit union, which was a convenient thing. Th Raleigh area is the headquarters of the State Employee's Credit Union (SECU), which I believe is the second largest credit union in the nation and whose membership involves a connection with employment or former employment with the state government and its subdivisions  (including, e.g., public school teachers) and certain family members. You can't help but wonder if some credit unions are intimidated by the existence of other large credit credit unions or banks and thus don't seek community charters. Of course, the same thing may exist elsewhere, and maybe I'm naive, but then why do community-chartered credit unions manage to get along where they do operate?  

1
Comment #8 by 51hh posted on
51hh
yt,

Good information (0% BT) on NFCU; there is actually one ongoing in January this year.

BR,

51

2
Comment #9 by Anonymous posted on
Anonymous
4% for a 1 year certificare with a max of $5000 is a joke. Playing games with transfers with credit cards can be very dangerous.  If you forget the date or have an income problem you can get yourself in a hole.  For PENFED you just have to join "Voices for Amerca's Troops".  To join it costs just a one-time $15 fee.  I'm not sure if it is tax deductable.  For me PenFed's customer service has been poor when I was checking into mortgages.  I also forgot to sign a check for a credit card payment.  Penfed woundn't honor the check but never even contacted me.  I sent the payment in 15 days before the due date.  I found out on my own that the check had a problem. After calling 2 times I was able to get the problem fixed and the charges and fees wavied.  I just use my Penfed card for gas purchaes and get 5% back. 

 

  With Penfed years back I was able to get 6% CD's.  I even got in on the famous 10 year CD at 5% a couple years back with a nice size CD that looks like a great move.  I believe Penfed made a mistake but honored the rate.

5
Comment #16 by Anonymous posted on
Anonymous
#9, 10, 11, 14 et al............Why don't we just agree that all the CD rates currently & from the past few years are a JOKE. 

6
Comment #10 by Anonymous posted on
Anonymous
The Navy Fed 'special' was 3% for 1 yr with a 3,000 maximum. A joke. Their rates haven't been competitive for any of their certificates for the last 3 yrs at least.

4
Comment #11 by ytytyt posted on
ytytyt
.

.

Dear #9, #10,

Indeed ... A Joke ... And those who participated are laughing all the way to the bank (nay credit union) to pocket few extra coins!  :-)

Yours Truly,
Anonymous

4
Comment #12 by ytytyt posted on
ytytyt
.

.

Dear Anonymous - #9,

My experience with Navy FCU is good.  They are able to take the 'minimum' payment for credit card 'automatically' from the checking account on the due date ... YMMV.

One can shedule the periodic ACH transfers to replenish the checking account quite easily ... With the whole lot of free "Calendar" services where one can set reminders - for payments, transfers (and birthdays) these days forgetting something is getting rather hard! ... Again ... YMMV.

Yours Truly,
Anonymous

2
Comment #13 by Anonymous posted on
Anonymous
To CC - # 4, Navy Federal recently opened a new branch in Vacaville in Northern California very closed to Travis AFB.  I imagine that was to service all the active and retired military people that live in this area.

3
Comment #14 by Anonymous posted on
Anonymous
Dear #11, A 3% 1 yr with a $3,000 max deposit is indeed a joke for anyone with substantially more to deposit. Some of us expect a lot more than a few extra 'coins' for our trouble.

5
Comment #15 by CC (anonymous) posted on
CC
@ Anonymous #13...  THANK YOU! I somehow was not informed (or missed the memo) that there's a Navy FCU branch in Vacaville now.  That is WAY closer to me (I'm in San Francisco).  THANK YOU!  Now I know that I have better access to a branch if I ever need to conduct in-person transactions.  THANKS!

2
Comment #17 by ytytytyt posted on
ytytytyt
.

.

Dear #14,

Sure ... I agree ... Some of you might expect more for your "trouble" ....  But for some of us who do regular business with Navy FCU several times a month, this is no trouble at all ... It is merely a part of regular business ... So, some of us just do it ... and then laugh ... and then extra coins ... 

Dear #16,

All right ... I can agree to it ... But I like the joke where Navy FCU is giving 4% rate of 1 year certificate better. than the joke where TIAA-CREF is giving 0% for their money market. ... One can laugh at the former, and frown at the later! :-)

Yours Truly,
Anonymous

4
Comment #18 by rjm (anonymous) posted on
rjm
I recently joined Alabama Power employees credit union. Turns out my mother, somehow, had an account there so Im eligible. Asked the girl when opening my account if they "checked" had I just pretended to be an employee and she said they take everybodys word for it. So I COULD have just said I work for APCO or one of their other groups and they wouldnt ask me to prove it or check or anything. Sounded like their policy is not to question their customers or potential customers.

1
Comment #19 by Anonymous posted on
Anonymous
Re #17, a maximum yield of $90 on a 1 yr cd paying 3% might be appealing to some but for those with more than 3K to invest it's chump change. TIAA direct was paying 1.24% on its saving account , no maximum limits, for 11 months and just recently lowered it to 1%. A much better deal for those having much, much more than $3000 to park while waiting for interest rates to move up. Or one could go with Penfed's 2 or 3 yr certificates. So, if 3 grand is all you got, Navy Fed's one year 3%, 3 thou max deposit is appealing. For just about anybody else with substantially more to invest, Navy Fed offers nothing of value.

4
Comment #20 by Anonymous posted on
Anonymous
#19.........I would not so humbly suggest that none of you people, (regardless of whether you have $3k or $3 million in CDs)...........  are really "investing", unless your definition of that word means that it is your intent to lose purchasing power, i.e. lose money, year after year. All you're really doing is bleeding out at different speeds.

4
Comment #21 by ytytyt posted on
ytytyt
.

.

Dear #19,

Alas ... Looks like you still are not able to get the point ... I'll try one more time.

Yes ... 3k is a chump change (for me as well) ... However that particular 3k is not even the 3k that I've got! ... I mean that in effect that 3k is not owned by me to start with ... As I explained, it is the money I've borrowed at 0% using Navy FCU's credit card, that I'm turning around and using it to earn 3% ... So whatever interest I get (minus taxes) is truly a free lunch (at a place much better than the McDonalds of course!) .. Also since doing business with Navy FCU is something that is done in due course of the month, so it is no 'trouble' to do this once a year ... In short, for some this amounts to a few extra coins ... and for some the proverbial free lunch!

BTW, here is the "deal" Navy FCU has for the Balance Transfer. If one has an aircraft carrier size credit limit then one can borrow plenty at 0% and start earning few extra-coins/free-lunches!

https://www.navyfederal.org/membership-benefits/offers-discounts/balance-transfer-offer-2013.php

Yours Truly,
Anonymous


3
Comment #22 by Anonymous posted on
Anonymous
Dear #20, the primary rule of financial wisdom is to preserve principal. If you are able to accomplish that, even with interest rates at the present level, you are doing very well. 

3
Comment #25 by Anonymous posted on
Anonymous
#22.........Very very true. However, preservation of principal is not technically "investing".............because investing involves the expectation of (or at least an attempt at) a profit, whereas preservation of principal is just that, preservation. 

All I'm saying is that people around here have all their money getting 2% in some CD & call it investing in CDs. That is NOT investing.............because there is no possibilty of profit whatsoever. 

1
Comment #23 by Anonymous posted on
Anonymous
Dear #21, in none of your previous postings extolling the splendour of the 1 yr 3%, 3K max Navy Fed CD did you include the fact that "it is the money I've borrowed at 0% using Navy FCU's credit card, that I'm turning around and using it to earn 3% ...." Perhaps if you had remembered to include that nugget from the get-go we would not be having this, by now, extremely tedious conversation. (:>)

1
Comment #24 by ytytyt posted on
ytytyt
.

.

Dear #23,

Well ... if only you would have been careful enough to read thru the message dated "Wednesday, February 6, 2013 - 6:57 PM"  ...  Which is the very first one I posted in this thread has .. err the nugget ... about 0% BT offer, maybe the tedious would have been un-necessary.  :-)

Yours Truly,
Anonymous

2
Comment #26 by ytytytyt posted on
ytytytyt
.

.

Dear #25,

No no ... not all ...

Some here have portfolios in addition to traditional CDs ... Like Structured CDs, Structured Notes, Bonds (Treasuries, Muni, Corporate, Junk, Sovereign) , Stocks, ETFs/MFs, Metals, Commodities, Currencies ... etc. ... And some here do shorting as well ...  (If it just that the focus here on CDs and other "deposit" accounts, as the site name suggests.)

Yours Truly,
Anonymous

1
Comment #27 by Anonymous posted on
Anonymous
Dear #24, your  original post you refer to , #6,does not in any way associate the 3% CD offer as part of  any 'balance transfer' option you have exercised as anyone with a working grasp of English Reading Comprehension can easily determine.

1
Comment #28 by Anonymous posted on
Anonymous
Dear #25, the rate of return does not determine what is or is not an 'investment.' Technically, an investment is anything one places money into in hope of realizing a profit or at a minimum, preserving principal.

1
Comment #31 by Anonymous posted on
Anonymous
#28........Actually the "preservation of principal" part is not investing. If you check the definition, you'll not see mention of it. 

#26........Obviously I'm wrong if that is true. But it sure doesn't sound that way with the way people lament about rates. In fact aren't there a number of people here who have publically stated they're completely out of stocks & other things & have all their money in CDs?

1
Comment #29 by Anonymous posted on
Anonymous
.

.

Dear #27,

No?  Okay ... How about connecting dots from one paragraph to the next and make an educated guess about whats' up? ... That won't be elementary  ... would it be Dr Watson?  ... But I concede ... Mere English Reading Comprehension perhaps is insufficient ... A little hint of logic will be needed as well. :-)

Yours Truly,
Anonymous

 

1
Comment #30 by Anonymous posted on
Anonymous
.

.

Dear #28,

All right ... Then "technically" the underside of your mattress should be a place where you ought to "invest" in the hope of preserving your principal ... No?

Yours Truly,
Anonymous

 

1
Comment #32 by Anonymous posted on
Anonymous
.

.

Dear #31,

Can't speak for others of course ... But being a trader I have held all of what I mentioned at some point or the other, and continue to from time to time.  (And have quite a few of Structured CDs and Structured Notes. )

So what "investments" (technically correct or otherwise) do you use?

Yours Truly,
Anonymous

1
Comment #33 by Anonymous posted on
Anonymous
FWIW, #31 is  the resident troll.

1
Comment #34 by Anonymous posted on
Anonymous
Yours Truly........I haven't had any CDs, bonds,  savings accounts, no FDIC accounts (except my daily checking acct.) for 10 years now.

A little bit in stocks, 2 small paid for commercial properties in Nor Calif. Bay Area  that thankfully have been rented out as restaurants pretty much the whole time I've owned them .............& a very hands on & rapidly expanding amount in Lending Club earning 15% per annum for the last 3 years.  Yes, I do know that they're technically bonds. But anyway, that's it. 

#33..........Yes, that's the default word for anyone that is capable of independent thought, isn't it?

1
Comment #36 by Anonymous posted on
Anonymous
You transfered rhe money using a 0% transfer.  Just make sure that you don't make any mistakes or they can hit you with intrest and fees.  My investments are very diverse.  7 mutual funds all different(One has 35% bonds). SOme single stocks , individual  muni bonds, reits, MLP's, some gold coins bought over 15 years ago, I Bonds with a 3% base.  I also keep a large sum in CD's and 3 savings account.  I'm a little afraid of the market now with the clowns running our gov't.  But with CD's and savings acc't I sleep a little better.

1
Comment #37 by ytytytyt posted on
ytytytyt
.

.

Dear #34,

Real estate in bay area has picked up nicely ... Job market has picked pace as well ... If the things stay the same then I guess you'll very easily surpass the CD rate by a very wide margin ...

Yours Truly,
Anonymous

1
Comment #38 by ytytytyt posted on
ytytytyt
.

.

Dear #35,

You used the word "or" in your post of "February 8, 2013 - 8:43 PM" but changed it to "and" in post of "February 9, 2013 - 6:00 AM".  You even capitalized the word and.  Are you finding it difficult to write English in a consistent manner?

Now coming to the lack of logic in your writing my "friend":  The "or" condition gets fulfiled if either of the two criterion joined by "or" is true.  But an "and" condition gets fulfilled when both the criterion joined by "and" are true. ... Do you comprehend this?  ... No?

So ... your technical definition dated "February 8, 2013" was fulfiled by a single criterion of the preservation of principal, hence the underside of your matterss was a perfect place for you to "invest" in.  :-) ... So did you invest in there my friend?

Yours Truly,
Anonymous

1
Comment #39 by Anonymous posted on
Anonymous
Dear #38, Only two things are Infinite: the Universe and stupidity. Thank you for volunteering to provide a vivid illustration of the latter. Carry on, old chap.(:>)

2
Comment #40 by ytytytyt posted on
ytytytyt
.

.

Dear #2, #14 ... #35

Are you having the "sour grapes syndrome"?  .. :-)

Yours Truly,
Anonymous

1
Comment #41 by Anonymous posted on
Anonymous
Yours Truly...............Frankly, I've had no trouble beating CD rates by a wide margin for some time now. And even during the 2008 crisis both my properties stayed rented so it was no big deal. Not having mortgages on them certainly made it easier to sleep................though in retrospect I should have tried to pick up a couple more "distressed" properties at that time.

Still.............I'm happy with how things are going.  At the end of the day (after expenses) between the rents, & my Lending Club returns, I figured out some time ago that I would need to have 13 TIMES the assets I currently have parked  in the best CDs to generate as much "monthly cash flow" as I do now. No exaggeration.  Not bad for a "troll", wouldn't you say? :)

1
Comment #42 by ytytytyt posted on
ytytytyt
.

.

Dear #41,

Great ... If your properties are in SOMA, then I might have visited those!

My real estate trading is limited to buying/selling REITs, especially GOV.

Yours Truly,
Anonymous

1
Comment #43 by Anonymous posted on
Anonymous
Yours Truly.............SOMA, no, I wish.  No they're in Oakland, 2 blocks from Jack London Square. If I had a magic wand & was able to magically dematerialize both of my properties  & rematerialize them ~ 400 yards away I'd be in Jack London..............& I'd triple my rent income. :) 

Like they say, location, location, location! :)

1
Comment #45 by Bozo posted on
Bozo
Further to "rjm"s observation above, I sometimes wonder how many CUs actually bother to verify FOM eligibility. Over at Boglehead forum, we used to joke about driving to San Antonio on a Saturday, picking out a church on Sunday to go to (once) and filling out a membership card, and then opening up an account at one of those San Antonio CUs offering great CDs. "But sir/madam, it doesn't say you have to worship AND live in San Antonio. Yes, I know I live in St. Louis/Denver/Chicago (pick one). Anyway, I only go to church once a year. Is that a problem?"

And do you really think NFCU verifies retired military status with the DoD? Surprise me.

2
Comment #47 by pearlbrown posted on
pearlbrown
Re:  post #45 2/11 6:38pm from Bozo

I have had to document my eligibility for membership at 3 credit unions in the last couple of years.   In at least 2 of those cases, I was questioned closely about how I met the criteria.  The CSRs explained that comments from an internal audit about weak controls regarding membership eligibility had led to changes in procedure, so the requests for membership were being examined more closely.  Fortunately I had my ducks in a row and was able to qualify at all three,because they had extraordinary CD rates which I was eager to lock in. 

1
Comment #48 by Anonymous posted on
Anonymous
Pearlbrown..........I can't wait to hear what your definition of "extraordinary" must be. 2.5%, 3%, 3.2%?? Yeah, truly extraordinary. :)  With a bit of luck, you might actally stay even with inflation! 

1
Comment #49 by lauren (anonymous) posted on
lauren
Great post, this was exactly what I was looking for. My step mom was just telling me that she is a part of a Seattle credit union and that I should join. But I have always been confused by credit uniions. I always thought that when you saw like American Airlines Credit Union that you had to be part of the American Airlines already. What are the best reason someone would want to to join a credit union. What can they do that a bank can't? I am just trying to get a better understanding. Thanks for sharing.

1
Comment #50 by paoli2 posted on
paoli2
Lauren:  If you check out Ken's rate list, the better rate is usually at a credit union.  However, the problem is that we can't always become a member due to their membership criteria.  The "best" rate these days may just be a little over 2% for a 5 year CD but one just can't find that at many banks anymore.  I joined about 3 credit unions this past year or so because I could not even get 2% at local or nearby banks. 

1