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USAlliance Credit Union can call CDs early

Wednesday, May 7, 2014 - 11:13 AMUSAlliance Credit Union - Details
The credit union, which offers easy membership, has recently offered special CDs with top rates.  If they interest you, be aware that on page 4 of the membership agreement the credit union gives itself the right to call or redeem certificate amounts early.
10
pearlbrownpearlbrown1,438 posts since
Nov 2, 2010
Rep Points: 6,268
1. Wednesday, May 7, 2014 - 11:47 AM
Thank you so much for sharing this important piece of info.  What good does a good long term rate do if they can take it away any time they want.  We all need to double check the membership agreements on all CDs no matter who we buy them from.  Much appreciation for giving the red flag on USAlliance.
2
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,011
2. Wednesday, May 7, 2014 - 12:02 PM
The credit union gives itself the right in its membership agreement (ie:  the rules by which you agree to abide when you join the credit union) and not in the certificate account disclosures as might be reasonably expected.     All it mentions in its certificate disclosure is that if it calls or redeems your account early, it will give you 60 days' written notice but someone could overlook this information in the "Other terms and conditions" section. 

Just one more reason it is important to read all documents thoroughly when establishing a new relationship of any kind with any institution, not only the documents governing a specific account/type. 
4
pearlbrownpearlbrown1,438 posts since
Nov 2, 2010
Rep Points: 6,268
3. Wednesday, May 7, 2014 - 1:58 PM
This is more scary that they do it in the actual Membership Agreement.  To me, this gives them the right to do it for any CD at any time.  Like you suggested, just reading the certificate disclosure for one's particular CD may not actually state it but they have protected themselves completely in the Membership Disclosure.  I think it should be necessary for them to also restate this in every CD they sell since many of their customers may be seniors who do not take the time to scrutinize all that tiny writing!  I do so far but who knows if I can continue to be so scrutinous as I age.  Very unfair of them.
2
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,011
4. Wednesday, May 7, 2014 - 3:02 PM
I have never seen this language before. I wonder if they have ever unilaterally closed CDs in the past? It is interesting that if depositors close early they have to pay a penalty, but the credit union can do it without any penalty to them. Where is the symmetry?
4
loulou544 posts since
Aug 3, 2010
Rep Points: 3,397
5. Thursday, May 8, 2014 - 7:03 AM
To me this is boarding on being illegal as it is being deceptive to the consumer. If they reserve the right to call in a CD early and bury this under their terms and conditions because the rate is no longer in their best interest they should have to advertise their CD’s as a callable CD. In 2008 there was a lawsuit brought against  Lasalle bank and a few others. The suit alleged that the defendants did not adequately inform the purchasers of callable CDs that they might suffer losses. Even though USAlliance is not selling it as a callable CD that is what they are. Would be curious to hear from anyone that had this happen to them.
3
FARFAR106 posts since
Feb 26, 2013
Rep Points: 381
6. Thursday, May 8, 2014 - 9:17 AM
#5:  I spoke to a rep at US Alliance CU who spoke to her manager about my question concerning their "callable" CDs and are they really callable and if so why aren't customers told about this before they purchase the CDs.  She said her manager said they only would call the CDs if the credit union were to come under great distress which would be a rare event since they are in excellent shape financially.  This is why they don't feel it is necessary to advise customers of the possibility.  She also said a credit union is different from a bank and people become members and should be expected to read the Membership Disclosure before they buy products.  I told her many of her customers are probably seniors who are looking for the best rate and I personally don't think they are going to read the Membership Disclosure before purchasing the CDs and they should advise them about the "possibility" of the CD being called.  She will pass my concern to her manager. 

Legally, I think they are protected by just putting it in their Membership Disclosure and were probably advised about this before doing so by their attorneys or they would not be taking a chance of later being sued.  I tried to call the NCUA about this but it was like chewing nails trying to get the right person on the line so I gave up on that.  I would personally not fool with Us Alliance's CDs just for the fact that they aren't openly disclosing this possibility to customers in more ways before they buy the CDs.
2
paoli2paoli21,372 posts since
Aug 10, 2011
Rep Points: 6,011
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