At the beginning of the month, I stated, “It’s another good news Monday” at Navy Federal Credit Union (Navy Fed) because the 5-year Certificate Special rate had been increased to 3.50% APY on all deposit tiers.
In that July 8 blog post, I wondered how long the 3.50% APY would last. Let me quote myself.
This offering was a surprise to me. With so many other banks and credit unions lowering their CD rates at the start of July, I had feared Navy Fed’s 3% rates would be disappearing. That did not happen last week, as the CD rates remained unchanged. Now with this new offering, Navy Fed has become the 5-year rate leader.
I received info about this CD from a Navy Fed official. I asked how long this offer will last. The official said that “as of now, we have no end date in mind.” Considering that Navy Fed’s competitors are offering much lower 5-year rates (for example, PenFed’s 5-year rate is only 2.45% APY), Navy Fed will likely be surprised about the demand. So I wouldn’t count on this offer lasting past July. That’s especially the case if the Fed cuts rates at its meeting on July 30-31.
It’s the Last Day of the Month
And there is more good news from Navy Fed: two competitive Certificate Specials. The 18-month (3.00% APY) and 9-month (2.75% APY) Certificate Specials can be opened with a minimum $1k “purchase amount” (Navy Fed’s term for a deposit), with “no maximum purchase amount.”
The Certificate Specials are also available as IRAs (Traditional, Roth, SEP, ESA), earning the same APYs with the same funding requirements.
As stated in Navy Fed’s Combined Certificate Disclosure, the Early Withdrawal Penalty reads as follows:
(a) If the term to maturity is one year (or less) for certificates, the amount forfeited is equal to the lesser of: (1) all dividends for 90 days on the amount withdrawn, or (2) all dividends on the amount withdrawn since the date of issuance or renewal.
(b) If the term to maturity is greater than one year, the amount forfeited is equal to the lesser of: (1) all dividends for 180 days on the amount withdrawn, or (2) all dividends on the amount withdrawn since the date of issuance or renewal.
Accrued interest can always be withdrawn without any penalty. According to Navy Fed’s Certificate Brochure,
Dividends on Navy Federal certificates are compounded daily and credited monthly. They’re posted to the account on both the last business day in the period in which they are earned and at maturity. Dividends that have been credited are available for withdrawal anytime without penalty.
Thanks to DA reader, SYC, for the Forum post of about Navy Fed’s latest hot deals.
Navy Fed’s Position on Certificate Rates
In the July 8 blog post, I offered some insight on Navy Fed’s aggressive stance on Certificate rates. Katie Miller, Senior Vice President of Savings Products, responded to my inquiry by stating,
"One benefit of membership with Navy Federal is the consistent way in which we reward loyalty. As a credit union, it is our mission to aggressively advocate for our members and set the gold standard with high savings dividends and low loan rates -- all for the sake of improving our members' financial well-being."
This feel-good response wasn’t exactly what I was looking for, so I turned my attention to Navy Fed’s financial data. At the end of the first quarter, Navy Fed reported $75.06 billion in loans and $77.21 billion in deposits, resulting in a loan-to-deposit ratio of 97.2%. That’s quite a bit higher than the average ratio (82.4%) for credit unions. When an institution has strong loan growth, there’s a need to increase deposits to fund the loans, which subsequently puts upward pressure on deposit rates. This may be the case with Navy Fed.
In June, I mentioned that Navy Fed has been growing at a fast pace. Last quarter, their asset level surpassed $100 billion, making Navy Fed the largest credit union in the nation, by far. The combination of strong loan growth and Navy Fed’s large size may make it possible for Navy Fed to maintain these competitive Certificate rates for a while.
Funding and Accessing Maturing Funds
When opening a Navy Fed Certificate online, the easiest way to fund a Certificate is probably is through a transfer from an existing Navy Fed checking, savings, or Money Market Savings account. An ACH transfer initiated by another institution may be the quickest way to get the funds into your Navy Fed liquid account. Once the funds are received, a Certificate can be opened using the online application, which allows you to specify that funds be pulled from that Navy Fed account.
An easy way to receive matured Navy Fed Certificate funds is to have the funds transferred to any existing Navy Fed checking, savings or Money Market Savings account. There is a 21-day grace period following maturity before the Share Certificate automatically renews.
Note – Navy Fed has restrictions on ACH debits from its savings account. Navy Fed’s Electronic Funds Transfer Agreement and Disclosure reads in part,
When you originate an ACH transfer at another financial institution, please note that your Navy Federal savings account may only receive ACH credits. Checking accounts may receive ACH credits and debits. MMSAs may receive ACH credits and debits in accordance with the limitations set forth in the MMSA agreement.
If you plan to pull funds from Navy Fed using the ACH service of another institution, you should consider opening either the Money Market Savings account or one of Navy Fed’s checking accounts.
Beneficiaries and Trust Accounts
Unlimited beneficiaries (with assigned percentages) can be named, with name, address, DOB, and Social Security numbers required for each beneficiary. To designate beneficiaries, refer to Navy Fed’s Payable on Death (POD) and Deposit Trust Accounts Form. This form can also be used to open accounts under a legal trust; Navy Fed calls that type of account a “Deposit Trust Account.”
Unlike PenFed's nearly universal membership eligibility, Navy Fed’s field of membership (FOM) is restricted to individuals who have a military connection, regardless of residency status.
As I described in a 2017 blog post, Navy Fed’s FOM has expanded and, while a military connection is still required, many more people are now eligible to join. The most recent group added are individuals with family members who were affiliated with the military at any time.
Navy Fed’s "Become a Member" page lists the various ways to qualify for membership.
Active Duty, Retired and Veterans – Service members in all branches of the armed forces are membership-eligible, including:
- Active Duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard, and Ait National Guard.
- Delayed Entry Program (DEP)
- DoD Officer Candidate/ROTC
- DoD Reservists
- Veterans, retirees, and annuitants
Family Members – Individuals with parents, grandparents, spouses, siblings, children (adopted and step), grandchildren, or household members who at any time were affiliated with the military or are already Navy Fed members are also eligible to join.
Department of Defense (DoD) Civilians – Any DoD civilian employee, U.S. government employees/contractors assigned to DoD installations, and DoD retiree/annuitants are welcome to apply.
Credit Union Overview
Navy Federal Credit Union has an overall health grade of "A" at DepositAccounts.com, with a Texas Ratio of 5.38% (excellent) based on March 31, 2019 data. In the past year, Navy Fed has increased its total non-brokered deposits by $10.28 billion, an excellent annual growth rate of 15.38%. Please refer to our financial overview of Navy Federal Credit Union (NCUA Charter # 5536) for more details.
Headquartered in Vienna, Virginia, Navy Federal Credit Union is considered the largest credit union in the world. Founded in 1933 as the Navy Department Employees’ Credit Union of the District of Columbia, Navy Federal has grown from its initial seven members to more than 8,400,000 members and assets in excess of $103 billion.
How the Special Certificates Compare
When compared to 151 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Navy Federal Credit Union’s 18-month Special Certificate APY currently ranks first.
When compared to 191 similar length-of-term CDs tracked by DepositAccounts.com that require a similar minimum deposit and are available nationwide, Navy Federal Credit Union’s 9-month Special Certificate APY currently ranks third.
The above rates are accurate as of 7/31/2019.
To search for the best CD rates, both nationwide and in state specific, please refer to our CD Rates Table page.