Transportation Federal Credit Union Has Rate Leader 5-Year CD
As DA reader, HollyHolly, noted in a Forum post, Transportation Federal Credit Union (TFCU) has “one of the few remaining nearly 3% CDs.” The CD HollyHolly is referring to is the 5-year Jumbo CD, which currently earns 2.98% APY on deposits of $100k and above. The 5-year CD earns 2.78% APY and requires a much lower $1k minimum deposit.
Both 5-year CDs are also available as IRAs (Traditional, Roth, and CESA), earning the same APYs (except for an additional 10 bps for the 5-year IRA) with the same funding requirements.
The Jumbo CD’s 2.98% APY has been in effect for nearly a year. The rate is become increasingly more competitive in the past several months, as other nationally available long-term rates have trended downward.
According to CSR, the Early Withdrawal Penalty (EWP) is based on a formula, with the time left until maturity a determining factor.
TFCU has several useful forms on its website, including the Share Certificate Maturity Notice, which can be submitted electronically, and the Beneficiary Designation form. Three beneficiaries (with assignable percentages) can be named and Social Security numbers are required.
Thanks again to HollyHolly for the Forum post.
Excess Share Insurance
Additional coverage up to $250k is provided by the Excess Share Insurance Corporation, a subsidiary of American Share Insurance, the nation's largest private deposit insurer.
Availability
Headquartered in Alexandria, Virginia, Transportation Federal Credit Union’s field of membership (FOM) provides virtually all U.S. citizens and resident aliens with a way to join.
Easy Membership Requirement: Although the American Consumer Council (ACC) is listed under "In Washington, D.C. Metro Area" on the "Join Us" page, according to CSR and the online application, anyone, regardless of where they live, can qualify for TFCU membership by joining the ACC.
The Eligibility page of the online application states,
I qualify for membership because I am a member of the American Consumer Council (ACC).
DA reader, muniman, stated in a Forum post yesterday, that he “joined by being a member of American Consumer – was very simple, strongly recommend this “overlooked” FCU.”
Employment: Active and retired employees, military personnel, contractors, and other related occupational groups affiliated with the U.S. Department of Transportation and the Federal Aviation Administration (Washington, D.C.) are eligible to join. The two largest groups are the Department of Homeland Security and the TSA, with no residency requirements for an employee or retiree.
In the Washington, D.C. area there are more than 50 governmental agencies, businesses, and associations that qualify for membership. There are also eight Boston area governmental agencies (including the First Coast Guard District) and businesses that also qualify.
Relationship: Immediate family members and household members of individuals who are eligible for membership can also qualify. Immediate family is defined as “spouse, child, sibling, parent, grandparent, or grandchild”, including step- and adoptive relationships.
Complete details are available on TFCU’s "Join Us" page.
Joining TFCU and/or opening a Jumbo CD can be done online, or at any of the two Washington, D.C. branches or the Boston branch. The Membership Application is also available as a download and can be returned to any branch or by mail. (Note: TFCU requires two government-issued forms of photo identification to complete the application process.)
Your Transportation Federal Credit Union membership begins with $5.00 deposit to your Share Savings Account.
TFCU members have access to more than 3,500 Shared Branches and 30,000 fee-free CO-OP ATMs.
Transportation FCU is now a shared branch, meaning members of other, participating credit unions can use TFCU locations to conduct transactions as well. You can also conduct transactions at thousands of shared branches and surcharge-free CO-OP ATM locations including our three locations.
Credit Union Overview
Transportation Federal Credit Union has an overall health grade of "B+" at DepositAccounts.com, with a Texas Ratio of 9.03% (excellent) based on September 30, 2019 data. TFCU has an excellent capitalization level (10.72%), the result of holding $234.98 million in assets with $25.19 million in equity. Please refer to our financial overview of Transportation Federal Credit Union (NCUA Charter # 3140) for more details.
Transportation Federal Credit Union was founded as the Civil and Aeronautics Federal Credit Union in 1939 by twelve employees of the Civil Aeronautics Board, the first governmental agency that regulated aviation services. 81 years later, TFCU has substantially expanded its FOM and grown to nearly 21,000 members.
How the Jumbo CD Compares
When compared to the similar length-of-term CDs tracked by DepositAccounts.com that are available nationwide, Transportation Federal Credit Union's 5-year Jumbo CD and CD APYs currently rank first and second, respectively, and regardless of minimum deposit requirements.
| Interest Rate | CD Length of Term | Credit Union/Bank |
|---|---|---|
| 2.98% APY | 5-Year Jumbo Certificate ($100k min) | Transportation Federal Credit Union |
| 2.78% APY | 5-Year Share Certificate ($1k min) | Transportation Federal Credit Union |
| 2.75% APY | 60-Month Jumbo CD ($100k min) | Financial Partners Credit Union |
| 2.70% APY | 60-Month Promotional CD ($1k min) | Credit Union of the Rockies |
The above rates are accurate as of 2/8/2020.
To look for the best CD rates, either nationwide or state specific, please refer to our CD Rates Table page.
Remember, to stay in business CUs must "digest what they eat" - i.e., loan out the majority of funds they take in at a higher rate than they pay. Some of them are no doubt better at obtaining a good loan rate than are others.
There is a difference between a "rate" and an "annual percentage yield." I believe that is the reason why the APY on these 5-year CDs comes out as an odd number and causes some people to "wonder."
I'll give yet another perspective as to why they may not have done that to add to the mix others gave.
FIs don't arbitrarily choose their rates although there is often a range of rates that are acceptable within which they can consider factors other than immediate profit such as marketing factors.
When setting rates, they know what rate they have to set to attain a sufficient margin to sustain their model (banks and cu's may have differences in this model since for-profit/not-for profit models differ in some respects).
They need to maintain a sufficient spread between the average dollar weighted rate they pay out on their deposits, and the average dollar weighted rate they receive on their loans.
At some point you have to say "that's as high as we can go."
Another possibility is that the the 2.98% already compresses their margin for this product to the minimum comfort level but they went as high as they could go because they needed the 5 year funds so badly and they simply could go no higher.
Or something like that.
Or it could be that no one thought of the marketing impact of a 3% APY when they set the rate. :D