As DA readers know, Add-On CDs are not commonplace, but are usually sought-after products for obvious reasons. Yesterday’s blog post about GTE Financial Credit Union’s recent proposed changes (and quick recantation) to the terms on their existing Add-On Certificates may give some investors pause when they consider opening an Add-On CD.
It’s fortuitous that as I was finishing the GTE blog post, I received an e-mail from a DA reader, alerting me to a series of Add-On Certificates offered by Dort Federal Credit Union (Dort FCU). For a limited time, Dort FCU is offering AMP Certificates that allow additional deposits in any amount up to a maximum $50k throughout the term. The minimum opening deposit is only $100, with a maximum deposit of $50k. A unique feature of the AMP Certificates is the number of available term lengths: you can choose any term between 3 months and 60 months.
According to CSR, the Early Withdrawal Penalty for terms of 12 months or less is 30 days, and 90 days dividends for terms greater than 12 months.
As I stated in yesterday’s GTE blog post, an add-on feature can be very useful as a hedge against falling interest rates. When there’s a large drop in interest rates, it can be a big win for savers. However, that big win for savers becomes a big loss for banks or credit unions. If the institution doesn’t take into account the worst-case scenario, the institution may find itself in a difficult position when large add-on deposits are made after major declines in interest rates.
A forward-thinking institution (like Dort FCU) will typically limit add-on deposits to a specific maximum level to limit potential losses. Any limit on add-on deposits should be clearly specified in the disclosures and readily available before the CD is opened.
DA readers may remember the 4.00% APY offered on Dort FCU’s 25-month Certificate Special in March. The blog post about that Certificate Special prompted a lot of brainstorming in the Comments section, as DA readers speculated how to get around Dort FCU’s limited field of membership. While many of the comments were inventive and entertaining (and slightly dishonest), I think the response from DA reader, RRR, summed it up perfectly:
Bank fraud. Don’t do it.
While the AMP Certificates are not a great deal like the 25-month Certificate Special was, they’re still a good deal.
Thanks to DA reader who emailed me about the AMP Certificates.
Dort FCU’s rewards checking account, Boost Checking, has been earning 5.00% APY on qualifying balances up to $10k since February.
As you might imagine, the Boost Checking’s high APY comes with what some might consider to be burdensome qualifying requirements, even for a Reward Checking Account.
- At least $900 in direct deposit(s).
- Have at least 25 debit card transactions.
- Receive e-Statements
The Boost Checking account is only available as a personal account, with a limit of one account per membership number. There is no monthly service fee, no per check fee, no minimum balance requirement, and no minimum opening deposit requirement.
Headquartered in Grand Blanc, Michigan, Dort Federal Credit Union’s field of membership (FOM) is residency based, with individuals who live, work, worship, attend school, or volunteer in the Michigan counties of Genesee, Lapeer, or Shiawassee, or in Livingston County’s Deerfield and Tyrone Townships, eligible for membership.
Immediate family members (spouse, child, parent, sibling, grandparent, grandchild, including step- and adoptive relationships) of current Dort FCU members or membership-eligible individuals also qualify for membership.
Opening an AMP Certificate requires a visit to any of the above-mentioned branch locations.
It’s easy to join – you start by making a deposit ($5 minimum) to your Primary Savings Account.
Dort FCU participates in the CO-OP ATM network, giving its members access to nearly 30,000 surcharge-free ATMs throughout the country.
Credit Union Overview
Dort Federal Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 6.05% (excellent) based on June 30, 2019 data. In the past year, Dort FCU has increased its total non-brokered deposits by $86.3 million, an excellent annual growth rate of 12.86%. Please refer to our financial overview of Dort Federal Credit Union (NCUA Charter # 7569) for more details.
Established in 1951 as the Dort Industrial Employees Credit Union, the original FOM included the employees of AC Spark Plug, located on Dort Highway in Flint, Michigan. The Credit Union’s name was changed to Dort Federal Credit Union in 1984 when the FOM was expanded to include other area businesses. A community charter was adopted in 2002, opening membership to residents of four mid-Michigan counties. Dort FCU is currently 16th largest credit union in Michigan, with nearly 93,000 members and assets in excess of $962 million.
While the Dort name is probably not familiar to most DA readers, it’s well known in Michigan. Josiah Dallas Dort, along with Billy Durant, built their carriage maker company,
into the world’s largest. It formed the financial and structural basis for the development of Buick when Durant took that over and brought it to Flint. Dort was a major player in Buick’s growth, and as a result the development of General Motors.
Dort focused heavily on improving the life of those who toiled for the firm, and the city that it was housed in. He became known as “The First Citizen of Flint’ for good reason: land he owned became the college and cultural center, and the entire East Side of the city. He worked with the architect of New York’s Central Park to develop the Flint Parks system, which became world class. He promoted the arts in general and music in particular, and founded the Community Music Association, which later became the Flint Institute of Music.
How the AMP Certificates Compare
The ability to select a term anywhere between 3 and 60 months complicates the comparison process because of the way the AMP Certificate APYs are structured. For example, a 49-month CD APY would normally be comparable to a 4-year CD APY, but in this case, the 49-month AMP Certificate APY is the same as the 60-month AMP Certificate APY. It’s just something to keep in mind when looking at the following tables.
When compared to the similar length-of-term CDs tracked by DepositAccounts.com that are available within the FOM, Dort Federal Credit Union's 49-month – 5-year AMP Certificate APY currently ranks third, when compared to 4-year CD APYs.
When Dort Federal Credit Union's 49-Month – 5-Year AMP Certificate APY is compared to 5-year CD APYs, it only ranks eighth.
The above rates are accurate as of 10/4/2019.
To look for the best CD rates, both nationwide and state specific, please refer to our CD Rates Table page.