Michigan State Univ Fed Credit Union 7-Year Jumbo CD Is A Rate Leader
As DA reader, rockies, noted in a Forum post earlier in the week, Michigan State University Federal Credit Union (MSUFCU) is currently offering very competitive rates on its 7-year Jumbo Certificate (3.76% APY, $100k minimum) and 7-year Certificate (3.50% APY, $2,500 minimum). With impressive rate increases of 151 bps and 75 bps respectively, the 7-year Jumbo Certificate and 7-year Certificate APYs are the highest they have been in several years.
For those who think rates may be nearing their peak levels, these long-term Certificates might be the safe harbor you’ve been looking/hoping for.
The 7-year Certificate and Jumbo Certificate are also available as an IRA Certificate and IRA Jumbo Certificate (Traditional, Roth, CESA, SEP), earning the same APYs with the same deposit requirements.
As stated on the Rates page, the Early Withdrawal Penalty reads as follows:
Certificates of more than five years: Results in penalty
equal to 365 days dividends based on amount withdrawn.If the dividend is not sufficient to cover the penalty, the principal amount will be reduced to cover this amount.
Funding and Maturing Funds
According to CSR, the easiest way to fund a CD is through an internal transfer from an existing MSUFCU savings or checking account. MSUFCU participates in the CO-OP Shared Branch network, which makes transferring funds relatively easy. Maturing funds can be distributed by check or wire transfer, or deposited in a MSUFCU savings or checking account.
Earned dividends can be deposited into a share account each month or a check can mailed to the address on file monthly.
The Beneficiary Designation form is available as a PDF and can be downloaded. Up to six beneficiaries can be designated on this form with percentages assigned. Social Security numbers are required for all named beneficiaries.
Availability
Headquartered in East Lansing, Michigan State University Federal Credit Union’s field of membership (FOM) offers a way for almost any US citizen/resident alien to join.
Easy Membership: A $10 donation to the Desk Drawer Fund qualifies for MSUFCU membership.
Residency: Individuals who live, work, worship, attends school, or owns a business in the Michigan counties of Genesee, Lapeer, Livingston, Macomb, or Oakland are eligible to join.
University Relationship: MSU Faculty and staff who regularly work on campus qualify for membership. Alumni, donors, graduates, international students, and individuals currently enrolled at MSU (and their immediate family members) are all eligible for membership.
Employment: Employees of more than 530 SEGs (including State of Michigan employees) are eligible to join.
Family Relationship: Immediate family members (spouse, parent, sibling, grandparent, or child) and household members of current MSUFCU members are also welcome to apply.
Joining MSUFCU and/or opening a Jumbo Certificate can be done online (there is an “Open an Account” button at the top every page of the MSUFCU website) or at any of 21 Michigan branches located in Auburn Hills, Berkley, Charlotte, Clarkston, East Lansing (4), Grand Rapids, Haslett, Holt, Lansing (4), Mason, Okemos (2), Ortonville, Rochester, and Traverse City. Appointments can be scheduled online for any branch location.
The New Account Application is also available as a download and can be returned by snail mail.
A $5.00 minimum deposit into your Spartan Saver is required to open your account.
MSUFCU participates in the CO-OP Shared Branch and ATM networks giving members access to more 5,600 shared branches and nearly 30,000 surcharge-free ATMs located throughout the country.
Credit Union Overview
Michigan State University Federal Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 1.76% (excellent) based on March 31, 2022 data. In the past year, MSUFCU increased its total non-brokered deposits by $602.81 million, an excellent annual growth rate of 11.47%. Please refer to our financial overview of Michigan State University Federal Union (NCUA Charter # 23279) for more details.
Michigan State University Federal Credit Union is the largest university-based credit union in the world, with more than 325,000 members and assets in excess of $6.8 billion. Established in 1937 by eight Michigan State College faculty and staff members, the fledgling MSC Employees Credit Union’s first “office” was a founding member’s desk drawer. (Founded in 1855 as the Agricultural College of the State of Michigan, the college was one of the country's first institutions of higher education to teach scientific agriculture.) In 85 years of operation, the credit union has re-branded twice (reflective of the school’s name changes), merged with two other Michigan credit unions, and was named Federal Credit Union of the Year (2014) by the National Association of Federal Credit Unions.
How the 7-Year Jumbo Certificate Compares
When compared to similar length-of-term CDs tracked by DepositAccounts.com that are available nationwide, no banks or credit unions have a higher rate than currently offered on the Michigan State University Federal Credit Union 7-Year Jumbo Certificate, regardless of minimum deposit requirements. The following table compares the 7-Year Jumbo Certificate to the two highest-rate CDs from other credit unions and the two highest-rate CDs from banks.
The above information and rates are accurate as of 8/26/2022.
To look for the best CD rates, either nationwide or state-specific, please refer to our CD Rates Table page.
If during the last rate increase cycle in 2018 and 19 inflation was something like 2%, and CD rates peaked out at 3 to 4%, how can inflation be 9% now and rates peak out at the same 3 to 4%? It makes no economic or intuitive sense. Although I am not denying it is possible.
I have a possible explanation for it but I'm not allowed to talk about it.
I think it's okay to ask the question though why the Fed raised rates at all in 2018 and 19 when there was no inflation. That made no economic sense either. I think understanding the answer to that question is critical in understanding what actions the Fed is likely to be taking now.
Who knows when the rate increases begin to look they are tipping the economy into recession at which point expectations for further increases will change. Just 30 days ago the market thought the Fed was talking about a pivot in early 2023.
Having said that, I hear the concern.
This one is attractive now. If it turns out rates do increase over the next 6-12 months, you may regret buying this one for a while, but when the Fed stops or folks think a pivot might be coming I think you'll be happy you bought this one in the late summer of 2022. Said another way, I feel like over the 7-year term people who buy this CD will be glad they did. Will they have grabbed the top of the market, probably not. But they may miss buying anything attractive as they wait for what they think is a better entry point which never comes of which they miss...
An extension of this is that when you break investments down into the different categories, cash, fixed income, equities, real estate, commodities, etc. Each category, and subcategory would also be diversified. In the bank deposit category which is a subcategory of fixed income, there really isn't such a thing as a lack of correlation within the category. So generally all you can do is diversify by term. Some cash in a savings account and maybe a term diversified ladder of CDs fits the strategy. Alternatively you can speculate using a generally all or nothing strategy on one term. But I think that's somewhat indistinguishable from gambling evidenced by what I mentioned before about half the experts making diametrically opposed predictions. Unless you know something they don't, that's the investment strategy equivalent of flipping a coin.