About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Updates to the All-Access Credit Union List


Updates to the All-Access Credit Union List

In the last two months I've come across a couple of more credit unions that make it easy for anyone to qualify for membership. These credit unions have added associations to their fields of membership which allow anyone to join. Once you join the association, you are then eligible to join the credit union. I call these all-access credit unions, and I have a big list of these all-access credit unions which currently totals 74.

New all-access credit unions give savers more options for higher CD, checking and savings account rates. That's the case with the following two credit unions which I just added to the big list:

As you might expect, banks consider this as unfair competition since credit unions receive tax breaks. This 2010 New York Times article reported on this issue and the history of how large credit unions like PenFed evolved into an open membership. In my opinion, this supposed unfairness pales in comparison with the unfairness of today's suppression of interest rates.

Credit Union Removals

Not all changes to the list were additions. I removed 20th Century Fox FCU to the list based on a reader's comment. The credit union no longer makes it easy for anyone to join an association to qualify for credit union membership. Two associations that I mentioned in my 2010 post are still listed in the credit union's membership page, but it suggests those associations are for locals only.

I also decided to remove RiverLand Credit Union to the list. Even though there's an association that can be joined to qualify for credit union membership, RiverLand Credit Union doesn't appear friendly to out-of-state applicants. This was described by a reader who had his application rejected after spending $70 to join the association.

Many credit unions that had fields of memberships that were primarily based on employee groups have looked for ways to make it easier for locals to qualify. If they weren't able to add counties to their FOMs, they were often able to add easy-to-join associations. The main intent was to make it easier for locals to join. The side effect is that it can also allow anyone in the nation to join. However, the credit unions don't always embrace new members who are not local. This has been more common for small credit unions and credit unions that don't have online applications.

It's interesting to note that I have only one credit union based in Washington State on the list. It appears easy for Washington State credit unions to have fields of membership that include all Washington State residents. I've seen dozens of Washington State credit unions with this FOM. So Washington State credit unions don't need to add an easy-to-join association to their FOMs to get wide local coverage.

If you come across a credit union on the all-access list that is no longer easy to join for non locals, please leave a comment. Credit union fields of membership and management policies are in a constant state of flux.

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Bancxman   |     |   Comment #1
Ken, I find it amusing that the New York Times article refers to the former USA Fed CU as having been a culprit in utilizing a chatitable organiztion of its own making as a front for open membership. As you'll remember, USA Fed was acquired by Navy Federal which is a stickler for adhereing to the NCUA field of membership rules. However, before the acquisition was completed, USA Fed was swamped with membership applications submitted by persons such as yours truly for the sole purpose of eventually acquiring membership in Navy Federal. By the way, Ken, thanks again for directing our attention to the impending acquisition. Navy Credit Union is a terrific institution.

I'm not a big fan of banks, but I can sympathize with their arguments that CU's having been unfairly bending the field of membership rules. IMHO a credit union that's open nationwide is violating one of the primary rules of its charter. Pentagon Federal's FOM pretty much encompasses the entire national defense community. So, by adding membership in several charitable organizations to it field of membership, Pentagon Federal is cynically exploiting a  loophole in federal regulations that should be eliminated. Credit unions already benefit from being able to sign up the extended family of anyone who joins. That potential geometric increase in membership should be sufficient. If it isn't, then credit unions should seek to increase their fields of membership by recruiting legitimate business organizations. Otherwise, credit unions who insist on operating like banks should be subjected to the same tax and other obligations of banks. And, with respect, I don't see the nexus between the alleged suppression of interest rates and the abuse of credit union field of membership regulations. That sound like an uncharacteristic rationalization and simply doesn't make sense.
lou   |     |   Comment #3
 I feel no sympathy for the banking industry because they may have to compete with some credit unions. Most credit unions are way too small and offer too few products to actually compete with most banks, so having a tax advantage is probably the only way for the credit union industry to stay viable. As Truthseeker said, banks can rely upon free money from the Fed, whereas credit unions must compete for deposits to finance their lending activities.

I would bet you any amount of money most banks would never trade this advantage and many others they enjoy for the tax-free status of credit unions. The banking lobby (ABA) would like nothing better than to perpetrate their monopoly to ensure all depositors are at their mercy. Instead of worrying about the infinitesimal share of the marketplace credit unions currently have, the ABA should do something about the monopolistic practices of the five megabanks (50% of all deposits). As a public policy issue, this has far greater impact on the economic welfare of our country than attempting to put credit unions out of business, so banks can continue with their lousy customer service and their penurious rates.
Bancxman   |     |   Comment #4
Lou: Your comment is irrelevant. Ken's article clearly discusses all access credit unions and the banking industry's response to credit unions expanding their memberships by employing charitable organizations as fronts. Federal credit unions are required to adhere to the NCUA's Field of Membership regulations as a matter of law. Those regulations apply regardless of whatever alledges "advantages" banks currently possess. Accordingly, I fail to see any point to your comment.

One issue that might be worth pursuing, however, is the constant repetition on this blog of questionable economic theorys regardless of the posts under which they appear. I'm in no position to police this blog, but the repetitious and typically irrelevant rhetoric about the Federal Reserve, monetary policy and abuses by the big banks contribute little, if anything, of value. They're an indulgence for what appears to be a small group of posters and add nothing of significance. So, from my standpoint, I think it's time for those of you who just can't resist the temptation of sharing your peculiar insights to start getting on topic and stop tailoring or even misrepresenting posts on this blog to suit your own purposes.
lou   |     |   Comment #5
Bancxman, with all due respect, your criticism of economic theories that don't comport with your own opinions is rather narrow-minded and says more about your inabilty to consider viewpoints different from your own. Nothing I said wasn't true or questionable.

Whether you like it or not, current law allows credit unions to use charitable organizations in their Field of Membership, and no matter how vociferous or strident the banking industry is about this issue, their motives are very transparent. Fortunately, even Congress is not fooled by the self-serving propaganda disseminated by the ABA.
Anonymous   |     |   Comment #6
Lou, I wouldn't take Bancxman statements or comments too seriously.  Comment #1 explains how he joined USA Fed CU utilizing a charitable membership just so he could be brought into another CU, Navy Federal, that has very restrictive member requirement. Then he goes on to say that no CU's should be able to expand their membership base using charitable memberships.  If that method of membership was good enough for him, why is it not fair for the rest of us to take advantage.  In other word, he wants you to do as he says, and not as he does.  Pretty lame arguement.
Anonymous   |     |   Comment #7
# 6   I made myself pretty clear about one thing; i.e. if credit unions are going to operate on an open door basis, they should be treated like banks. That includes paying taxes the same as banks. I'm happy to take advantage of credit unions that offer membership in exchange for what amounts to an initiation fee paid to a charitable organization. And that's exactly the problem bankers complain about. While banks pay upwards of 30% of their income in taxes, Pentagon Federal gets away clean. The latter has an impressive list of membership organizations that fall well within NCUA FOM regulations. However, unlike Navy Federal, Pentagon Federal nevertheless also works the charitable organization gimmick to sign up more members. If inevitably follows that when the second largest credit union in the country starts gaming the rules, retail banks are inevitably going to lose business. In addition, the banks also have to listen to the complaints of their customers about higher fees that are necessary to cover their higher operating expenses. So, notwithstanding my good fortune, I think its about time the NCUA started ordering credit unions to start closing those charitable organization membership loopholes or get a bank charter.
lou   |     |   Comment #8
Bancxman or anonymous (whoever you are), do you work for the banking industry because you're proving to be an excellent shill for them. You certainly must be getting paid by them in one form or another to equate Pentagon Federal to a bank like JP Morgan. Pentagon Federal  has assets of $15 billion and JP Morgan Chase somewhere north of $2.5 trillion. Penfed is less than 1% the size of any of the megabanks. To compare any of the credit unions with these banks is utter nonsense.
Bancxman   |     |   Comment #9
"To compare any of the credit unions with these banks is utter nonsense." Lou: I'd be inclined to agree with that statement, except I made no reference to Chase or, for that matter, any particular category of banks in my previous discussion. That's a good thing because I'd always assumed that community banks and smaller banks in general would be most suceptible to the types of FOM games that credit unions are playing. So, while interesting, your statement amounts to an excellent example of basing your reasoning on a premise of your own design. That's hardly logical.

One more thing: While it's flattering that you believe me to be a shill for the banking industry, be assured that I'm infiltrating this discussion on behalf of the ABA or its members. I know a number of bank lobbyists and their attention is firmly riveted on Capitol Hill. It's a matter of record that the banking industry annually introduces legislation to, among other things, require credit unions to pay taxes. While that proposed legislation hasn't been successful to date, the banks have made some pretty good arguments in support of their position. The abuse of FOM regulations is just one of a number. Since the banking lobby is, if nothing else, persistent, it may be advisable for the federal credit union community to reconsider whether tolerating a de facto open door policy for membership is worth risking its federal tax exemption.
Bancxman   |     |   Comment #10
Erratum: That should be: "be assured that I'm NOT infiltrating this discussion on behalf of the ABA...."

Wishful thinking.
lou   |     |   Comment #11
The reason why I compared Penfed to JP Morgan Chase is because the megabanks control almost 1/2 of all the deposits in the US. Thus, when you suggest that Penfed has an unfair advantage with respect to the banks, one should not forget these banks dominate the banking industry and that Penfed is merely a speck of dust inside the giant banks' eye. If you ranked the largest banks in the US, Penfed would be around 60th on that list. So for you to imply that Penfed could somehow threaten the banking industry because of its tax exempt status is laughable.

BTW, the community banks to which you refer are not all that happy with your banking lobbyist friends, who supported the bailouts of Citi and Bank of America. The Independent Community Bankers of America expressed its outrage with the megabanks because of what they perceived to be the many unfair advantages afforded to them by our govt.

Since you feel so strongly about this issue, I urge you to disclose who you are and what is your connection to the banking industry. To suggest you are pontificating on this issue for altruistic reasons is hard to believe. If you are worrying about fairness, surely there are a million other things you could be spending your waking moments railing against. So tell us how you know a number of banking lobbyists. You just by chance are frolicking with bank lobbyists and coming to this blog to avail us of your outrage with credit unions because your sense of justice has been awakened due to the tax status of credit unions. If you are not being renumerated by the banking industry, I would suggest that you might find better causes than this one.
lou   |     |   Comment #12
Spelling Correction: "remunerated"