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Credit Union Says It Will Honor the Terms of Existing Add-On CDs

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On Monday it appeared that GTE Financial Credit Union had decided to unilaterally change the terms of existing promotional share certificates that had been opened in 2018 and 2019. That decision became official yesterday based on an email to members which described the change. The relevant excerpt of the Wednesday email reads as follows:

GTE Financial has updated the terms of its Add-On Certificates effective 9/29/2019. You can now utilize the add-on feature to deposit up to $6,000 per year, per certificate, for each year of the term. Your rate and term will remain the same.

I have good news to report. GTE Financial decided against this change. Today they sent out a new email to members with the subject “Please disregard our previous email regarding your share certificate.” The relevant excerpt of this email reads as follows:

While the promotion is no longer being offered for new share certificates, GTE will continue to honor the terms of the share certificates that were opened by members during the applicable promotional period and allow for additional unlimited deposits.

In summary, members who opened those promotional share certificates will be able to continue to make unlimited additional deposits as specified in the original disclosure and in the original terms that were listed on GTE Financial’s website. The original terms of these promotional certificates included the sentence, “Add-On option available in deposits of $20 or greater throughout the term of the certificate with no cap.”

When news of this issue first came up on Monday, I immediately attempted to contact GTE Financial management for information about their decision and to remind them about how serious of an issue this was. I did not receive a reply until this morning when I was first told of the good news that they changed their minds.

Past Cases of Credit Unions Changing Terms on Existing CDs

Long-time DA readers will likely remember the many past cases of credit unions that have tried to change terms on existing CDs. Unfortunately, most of these past cases didn’t have outcomes favorable to the members. Past examples of credit unions which changed terms on existing add-on CDs by not allowing additional deposits include United Services Credit Union in 2006 and Valor Credit Union in 2015. In addition to changing terms on add-on CDs, credit unions have changed terms on existing standard CDs by increasing the early withdrawal penalties. Past examples of credit unions include Fort Knox Federal Credit Union in 2011 and CEFCU in 2012.

Another case of a credit union that changed terms on existing CDs by not allowing add-on deposits was Achieva Credit Union. This case was detailed by this 2014 Tampa Bay Times newspaper article. I have a summary of this article in this 2014 blog post.

The article described how the Achieva member persevered for many months to try to get Achieva to honor the terms of his two add-on CDs. The Achieva member spent many hours corresponding with the NCUA and with the Florida Office of Financial Regulation. Eventually, the NCUA’s Office of Consumer Protection declared that Achieva’s disclosures were “not clear and conspicuous - a violation of the Truth in Savings Act.” Achieva was also instructed to work with the Achieva member “to reach an amicable resolution.” Unfortunately, the NCUA provided no promise to enforce the ruling. Achieva didn’t agree to honor the member’s reimbursement request for lost interest until the member sought help from the Tampa Bay Times.

As I described in 2014, this Achieva case is a disturbing example of the risks of relying on CD terms. The institution can decide to use legalese to change the terms of the CD before maturity, and the customer will have an uphill battle to change the institution’s mind.

My Take

I’m relieved that GTE Financial Credit Union decided not to go down the road that Achieva took. I’m not sure what happened to convince GTE Financial management to reverse its decision. I think our efforts to contact GTE Financial and inform them about the seriousness of this matter helped to change their minds.

One thing that I plan to do is to include links to this blog post any time I mention an add-on CD. This will be intended to provide warnings about the risks of add-on CDs. The add-on feature can be very useful for savers as a hedge against falling interest rates. It can be a big win for savers when there’s a large drop in interest rates. 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.

The wise institutions typically limit add-on deposits to some maximum level to limit their potential loss. Of course, this limit on add-on deposits should be clearly specified in the disclosures before the CD is opened by members. Those institutions that are not wise are more likely to be the ones that think it’s okay to change terms on existing CDs. In summary, be cautious of institutions which offer CDs with unlimited add-on deposits.

Fortunately, GTE Financial is a fairly large credit union with close to $2 billion in deposits. They will likely be able to handle a large rise of deposits that earn over 3% even if we return to a zero-rate environment. That possibility will be costly for them, but they can take comfort that they did the fair and right thing. Plus, they will save a lot by avoiding the bad publicity and the years of fighting with regulators and members.

Thanks to all DA readers who shared their experience on this issue by posting in the DA Forum and by emailing me. There is definitely strength in numbers, and by working together we can help ensure institutions honor their agreements with their members and customers.

Comments
klink
klink   |     |   Comment #1
Thanks Ken for looking into this. I know many here will be happy with the outcome.
Bambuk
Bambuk   |     |   Comment #94
I think this should be very simple issue: a contract cannot be changed unless both sides agree to such change. Period. I thought that is a cornerstone of a civilized society.
Maybe it is time for a Congress to codify this very simple concept that if a bank takes your money under certain conditions - bank cannot change those conditions after the fact.
The 30 day notice rule is pure garbage. If the rates went to zero 2 years from now and GTE decides to lower the APR to 0.1% - I don't think anyone will be happy they got 30 days notice about the change even if you are given an option to withdraw your money penalty free.
Contract means contract and government should make sure all participants are held accountable for what they agreed to. And any footnotes declaring that the terms of the contract can be changed unilaterally should be considered unlawful and void.
CDmanFL
CDmanFL   |     |   Comment #97
Bambuk, BLESS YOUR HEART. Well said, brother or sister! No one on this forum said it any better than you. I couldn't agree more!!!!
Predatory Depositor
Predatory Depositor   |     |   Comment #106
No the cornerstone of contractual agreements in a civilized society is that they are voluntary arrangements. You as a depositor have a right not to engage in an agreement if you do not accept the terms. If you choose to engage in the agreement without knowing or understanding the terms, the responsibility for any adverse consequences to you as a result of exercising of those terms is yours.
Dunmovin
Dunmovin   |     |   Comment #107
If anyone has a purported unilateral opt-out of specific rights given to the depositor, the agreement is illusory and defective!! The NCUA should not be "enforcing" illusory agreements
Hanrod
Hanrod   |     |   Comment #142
Yes, intentional deception for purposes of gain or limitation of loss, is criminal FRAUD!
Hanrod
Hanrod   |     |   Comment #143
What? Including intentional deception? See my comment below, i.e. this is FRAUD! Who are you, some Ayn Rand libertarian cowboy? We need "Libertarian Socialism", i.e. less restriction and regulation and more freedom for INDIVIDUALS , more / less for ORGANIZATIONS, scaled by size and assets.
Bambuk
Bambuk   |     |   Comment #236
What terms are you talking about? The term that one side has a right to unilaterally change the terms after the fact? Then why spell out all those APRs, EWP, and other numbers if they can be changed at any time? Just put one line on the agreement: 'give us your money and we will let you know when you will be able to get them back unless we decide to keep them'.
Sneaking a right to negate on the terms in fine print on page 15 should constitute an attempted fraud and such clause should be disregarded. If that is still legal, doesn't mean it is right. And if it is not right, it should be made illegal.
alan1
alan1   |     |   Comment #2
Thank you Ken, and thanks to all people on this site (and elsewhere) who contacted GTE and the NCUA about the credit union's attempt to eliminate the add-on provision, without any prior notice.

Personally, I'm leery of adding to my existing GTE certificates. I've had so many problems with them (incompetent representatives, GTE website glitches, and more) that I've gotten fewer CDs there than I would have opened had they been minimally competent.

But the outcome is good news, though I would not be shocked if GTE, at some future point, limits add-on contributions (after providing notice). That's what happened at Tobyhanna/Valor Credit Union, and the NCUA was fine with it.
Sam Kiggle
Sam Kiggle   |     |   Comment #11
"But the outcome is good news, though I would not be shocked if GTE, at some future point, limits add-on contributions (after providing notice)."

And that would still be illegal. Despite the idiocy of the masses.
CDmanFL
CDmanFL   |     |   Comment #14
Totally agree with Sam. I can’t imagine they would even try to do this after this debacle. I don’t think they would touch that with a 1,000 foot pole.
deplorable 1
deplorable 1   |     |   Comment #17
I'm saving all the original terms and emails just in case. It appears that while it may be illegal IMO that might not stop them from doing it anyway.
Predatory Depositor
Predatory Depositor   |     |   Comment #22
I don't think anyone here has enough information to know if it would be legal or illegal for them to change the terms. But I think two things are certain.

1. If it came down to a choice between bankruptcy and changing the terms, they would change the terms.

2. GTE Financial needs new management.
Sam Kiggle
Sam Kiggle   |     |   Comment #27
Predatory Depositor, everyone here has more than enough information "to know if it would be legal or illegal" to change the terms.

If any of you read the disclosure statement, you would know the terms which you accepted. GTE's was and is very clear. They tried to pretend their website took precedence and that is clearly illegal, and downright silly.

Don't presume everyone is ignorant.
1632
1632   |     |   Comment #130
@Predatory Depositor, GTE will do what they have always done in the past. Raise the fees, and create new fees to make up for any losses. Just look at their current fee schedule, it rivals those of some commercial banks, and this is from a CU that uses predatory tactics against it's own members.
Predatory Depositor
Predatory Depositor   |     |   Comment #140
#130
The problem with that strategy is that if you raise fees you become less competitive and it can potentially make the problem even worse because you won't be attracting new funds at the lower rates and you'll tend to lose customers except for those to whom you're paying the higher rates. Offering unlimited add-ons exposes you to unlimited risk. Market constraints won't allow you to fee your way out of it. GTE won't be in the clear for 5 years unless rates start to go back up again which they may.... So I'm not saying they're doomed, I'm just saying there's going to be some nail biting going on there for quite some time until rates start to go back up again. In the meantime, they are going to be dealing with even lower rates and probably much bigger inflows to the existing add-ons. We'll see how they fare under the pressure.
Kaight
Kaight   |     |   Comment #65
Sorry, Sam. It would not be illegal, as you state. Not at all. However, before making any such change GTE would need to provide account owners formal notice of the change 30 days in advance of that change. In this most recent instance they did not do that.
Sam Kiggle
Sam Kiggle   |     |   Comment #92
Sorry Kaight, you are absolutely wrong. And can cite no law or regulation that supports your wrong claim.

While it is true financial regulators are captured and have shown they will not enforce the law, and a lazy, apathetic population would rather bail out a big company then help their neighbors, that does not mean they are acting legally.
GreenDream
GreenDream   |     |   Comment #112
You sure about that sam?

you think Regulation DD and possibly Regulation E don't apply? why?
Sam Kiggle
Sam Kiggle   |     |   Comment #155
Because Green Dream, regulations are not laws.

This is a contract between a bank and a human.
GreenDream
GreenDream   |     |   Comment #194
It's a semantic difference that does mean anything. Although regulations are not laws, regulations have *the force of law*, since they are adopted under authority granted by statutes, and often include penalties for violations. Violate a regulation that has a penalty associated with it and try not paying that penalty and then tell the judge that it was only a regulation not a law. see how far that gets you.
alan1
alan1   |     |   Comment #71
A question for those who simply say that the original CD agreement and disclosures cannot be unilaterally altered by the credit union and that "a contract's a contract", etc. and that it's illegal to rescind provisions specified in the original disclosures: Have you read Ken Tumin's article, dated September 23, 2011, "NCUA Rules in Favor of Credit Union That Raised Early Withdrawal Penalty on Existing CDs"?
https://www.depositaccounts.com/blog/2011/09/ncua-rules-in-favor-of-credit-union-that-raised-early-withdrawal-penalty-on-existing-cds.html

The NCUA decision stated:
"For share certificates with maturities greater than one month, the credit union would have needed to provide affected members with a written change-in-terms notice at least 30 calendar days before the effective date of the change in accordance with Section 707.5(a)(1) of the NCUA Rules and Regulations.

"Since the credit union reserved the right to change terms in the Membership Agreement, the credit union would not have violated a federal consumer protection law or regulation regarding this matter provided it complied with the written notice requirements outlined in Section 707.5(a)(1) of the NCUA Rules and Regulations."

In my earlier postings re GTE, I cited Sections 707.4 and 707.5 of the NCUA's "Truth in Savings" Regulations.

Now, the NCUA's interpretation of the applicable regulations (and my interpretation of the applicable regulations) may be incorrect. It doesn't matter how I interpret those regulations, but it certainly matters how the NCUA interprets and _applies_ them.

It's the NCUA interpretation that matters.

As to the poster who claimed (in an earlier thread) that Sections 707.4 and 707.5 of the NCUA regulations have nothing to do with an institution's right to alter the terms of the certificate, after giving proper notice -- that's not a disagreement concerning interpretation. That's a disagreement concerning basic literacy.
Sam Kiggle
Sam Kiggle   |     |   Comment #93
Alan1, read what you wrote, the membership agreement reserved the right to make changes. Have you read GTE's membership agreement?

Finally, the NCUA is a regulator, not a court. They issue opinions, not legal rulings.
alan1
alan1   |     |   Comment #99
SamKiggle: Yes, I read my comment and, yes I have read the GTE member agreement. The FIRST PARAGRAPH of GTE Financial's "Account Disclosure - Member" states:

Terms and Conditions
Upon your receipt of this disclosure, you agree to abide by the GTE Federal Credit Union DBA GTE Financial bylaws and any amendments thereof. You also agree to the terms and conditions of any account that you have in the credit union now or in the future and agree that the credit union may change those terms and conditions from time to time.
[end of quote]
https://www.gtefinancial.org/File%20Library/GTE/PDFs/Account-Disclosure.pdf

Sam Kiggle: I don't think this is a matter of our having differing interpretations; it's a matter of reading comprehension.
CDmanFL
CDmanFL   |     |   Comment #102
The hyper paranoia continues. GTE is not going to change the terms. They'll be sold or go down first. They couldn't afford the lawsuits, nor would they want to deal with them. Again, zero worry from me.
Sam Kiggle
Sam Kiggle   |     |   Comment #157
CDman, I understand your desperation.

There would be just about zero lawsuits if and when GTE illegally changes its terms. How would you calculate the damage from refusing additional deposits? Have you ever hired a lawyer for anything? It won't be worth the cost. And yes, a smart local depositor could win in small claims court, it won't be worth it for anyone else.

And if GTE does change its terms, it will be to protect its solvency. So, there won't be damages, because GTE wouldn't allow add ons when it is bankrupt, anyway.

Using "add ons" as a core personal finance strategy is silly.
Sam Kiggle
Sam Kiggle   |     |   Comment #156
Alan1. Of course the terms can change, at any time.

For future CDs.

It is literally hard to comprehend that people are so quick to agree a bank can sell a CD, and then literally change any of the terms.
Ricochet
Ricochet   |     |   Comment #3
Thank You All !
Act 1:
Scene 1:
Exit: Stage (in the) Right
Shelby
Shelby   |     |   Comment #4
Thank you Ken for posting this update. There certainly is "strength in numbers."
CDmanFL
CDmanFL   |     |   Comment #5
Ken, THANK YOU SO VERY MUCH! You are wonderful!! And a big thank you to all my fellow posters!!
sam-i-am
sam-i-am   |     |   Comment #6
Ken - YOU ARE THE MAN! Your influence in the financial arena has certainly been proven once again. And a great big thanks to all DA readers who have quickly come together in large numbers and vocalized this issue and lit a firestorm on the web. Looks like GTE chose wisely to honor their contracts and stop a rapidly spreading wave of negative publicity. THIS IS THE BEST SITE IN THE WORLD!
gregk
gregk   |     |   Comment #30
Nothing's been proven whatsoever. I mean, thanks to Ken for his efforts, but let's stop the hero worship. Who knows what pressure was brought to bear on GTE by other parties completely unrelated to DA, - and for all we know that may have been decisive. We're not the only ones who established the 5 year add-ons, nor is Ken likely the only financial website operator or influential deposit account authority who involved themselves in this matter.
Cch
Cch   |     |   Comment #7
Thank you to all chatters on this forum and Ken for helping put pressure on GTE to reverse their decision and do the right thing.
zz
zz   |     |   Comment #8
"The wise institutions typically limit add-on deposits to some maximum level to limit their potential loss. Of course, this limit on add-on deposits should be clearly specified in the disclosures before the CD is opened by members" The Hudson Valley Credit Union (new name for the old Hudson Valley Federal Credit Union) did just that, they spelled out that you could do a one time add on at any time within the next year up to the original amount deposited. This does serve to protect them to some degree if interest rates fall as they have.
pwj7050
pwj7050   |     |   Comment #46
Also, Mountain America C.U. limited their add-on cap to $100k. I don’t know if the offer is still available, but the point is they smartly limited their exposure.

Also, I worry about GTE’s financial stability. They totally ****ed up their exposure with this UNLIMITED add on offer. Were they speculating that rates would not drop or were they just incompetent? I, certainly will not be depositing more than the $250k (including expected accrued interest) insured balance.

Ken commented that GTE seems able to absorb the loss from keeping the add-on feature, but I hope Ken continues to give updates, particularly about their ability to stay in business and pay members, on this dysfunctional credit union.
CDmanFL
CDmanFL   |     |   Comment #52
MACU is still honoring their add-on up to $100K. I'd be completely shocked and flabbergasted if they rescinded that. They are a first-rate organization and much better capitalized and managed than GTE and the cap provides protection and predictability. As for GTE, I totally agree with Ken that they can handle this and absorb the loss. Think about all the money they make in fees as well as the deposits they have for which they pay nothing. I remain highly optimistic that GTE will honor the unlimited add-on feature all the way to the end. It's not as if Bill Gates or Warren Buffet are banking at GTE and plan to add billions.
pwj7050
pwj7050   |     |   Comment #55
I meant I don’t know if they have the add-on offer for new accounts. Sorry for the confusion.
CDmanFL
CDmanFL   |     |   Comment #56
Yes, they do. Up to $100K. That's a very good sign!
pwj7050
pwj7050   |     |   Comment #57
Do you have any insight into their financial statements? Remember the 2008 financial crash. Supposedly, all the regulators were shocked by that debacle!

I don’t believe in conspiracy theories, generally, but that was a conspiracy.

Watch the Frontline episode, “The Untouchables” and make up your own mind.

The episode is about why the Obama Justice Department didn’t prosecute the 2008 criminals that wrecked the global economy that we are still experiencing.
CDmanFL
CDmanFL   |     |   Comment #58
Bauer Financial (very reputable!) gives GTE 4 stars (Excellent). I think everyone should stop panicking over this. They are on stable financial footing. I will sleep easy tonight.
pgroove_fan
pgroove_fan   |     |   Comment #59
Panic? Try this on for size:

"
CDmanFL | Oct 2, 2019 | Comment #22
I agree, where is Ken? We need your help! GTE has defrauded and misled your readers! And it seems they don’t care one bit. I called 3 times today and the brain dead reps were helpless and clueless. I only knew about GTE because of this forum and Ken’s post on GTE. Ken should use the weight of this community to make GTE abide by the terms of the add-on agreement."
njs
njs   |     |   Comment #110
As I learned from this site, add POD/beneficiaries to your account to increase the deposit insurance.
deplorable 1
deplorable 1   |     |   Comment #9
Thank you Ken for getting on top of this. Also thanks to everyone who called, emailed and chatted with them over this issue. I wasn't aware of FI's arbitrarily changing the terms on existing CD's. I thought that was prohibited by law and was the purpose of the "truth in savings" disclosure. I guess the only way to fight this is to pressure them in mass numbers.
Shelby
Shelby   |     |   Comment #44
deplorable your reaction when this news first broke about the (only allow 6 k per year instead of unlimited add on policy) was, and i quote you "I'm not going to broom them one way or another. If they don't honor the terms I'll just put $6,000/yr. in there and open multiple 6 mo. CD's with a 2-3% credit card and earn a higher rate anyway. This is why I opened several add-ons because you never know what's going to happen." Deplorable you were hardly sensitive to or supportive to those that deposited large amounts to GTE add on's, instead you came up with the snarky comment above and couldn't care less about anyone else's problems. Don't act now like you gave a .... before, your character already showed thru clearly.
deplorable 1
deplorable 1   |     |   Comment #63
No the first thing I said was that they need to honor the terms of the original agreement. I then posted those terms. If however they decided not to that was my back up plan. But your snarky insulting comment clearly shows YOUR character.
Decades
Decades   |     |   Comment #10
Thanks to Ken and the leadership D1 and Kaight. I have so many of these cuz I set up a ladder , when the 12 month comes due move it to the 18 month etc. for regular and IRA cd’s . Am not planning to load them all up at once. maybe I spooked em a little adding the 97k to the 12 month.
Can’t we ever lose just once in awhile?
Sam Kiggle
Sam Kiggle   |     |   Comment #12
This is capitulation, not leadership.

Deplorable 1 | Oct 2, 2019 | Comment #40

I'm not going to broom them one way or another. If they don't honor the terms I'll just put $6,000/yr. in there and open multiple 6 mo. CD's with a 2-3% credit card and earn a higher rate anyway. This is why I opened several add-ons because you never know what's going to happen.
deplorable 1
deplorable 1   |     |   Comment #18
No Sam it's about maintaining control over the situation no matter what happens. I also predicted they would have to send out proper notice and allow more add-ons.
Sam Kiggle
Sam Kiggle   |     |   Comment #20
What do you mean proper notice? You and Alan1 are simply wrong, a credit union cannot alter the terms of its disclosure statement by sending a notice.

Your predictions are fascinating, as always.
deplorable 1
deplorable 1   |     |   Comment #21
They are not supposed to be able to(by law) I agree but apparently they do. Proper notice as in a mailed letter/email detailing the change of terms 30 days prior to implementing those changes. Since that was not done it was pretty much a given that they would have to allow more deposits for 30 days.
Sam Kiggle
Sam Kiggle   |     |   Comment #28
There is no such thing as "Proper notice as in a mailed letter/email detailing the change of terms 30 days prior to implementing those changes."

You are repeating what Alan1 wrote and he is wrong. You are therefore also wrong.
Predatory Depositor
Predatory Depositor   |     |   Comment #47
dp1.... We should consider ourselves fortunate that we have such a distinguished legal scholar among us.
pwj7050
pwj7050   |     |   Comment #53
You’re kidding, right? It’s standard practice that US Mail is an acceptable form of notice in legal agreements.
Sam Kiggle
Sam Kiggle   |     |   Comment #61
So pwj7050 all you have to do is send a letter to your mortgage lender lowering your interest rate? Clever.
Sam Kiggle
Sam Kiggle   |     |   Comment #62
Predatory depositor, your profound unwillingness to learn the basics of consumer finance reflects your lethargy, not my knowledge.
GreenDream
GreenDream   |     |   Comment #108
"There is no such thing as "Proper notice as in a mailed letter/email detailing the change of terms 30 days prior to implementing those changes." - Sam Kiggle

Are you sure about that Sam?
https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/

Regulation DD
§ 1030.5 Subsequent disclosures
(1) Advance notice required. A depository institution shall give advance notice to affected consumers of any change in a term required to be disclosed under § 1030.4(b) of this part if the change may reduce the annual percentage yield or adversely affect the consumer. The notice shall include the effective date of the change. The notice shall be mailed or delivered at least 30 calendar days before the effective date of the change.

and Regulation E

"§ 1005.8 Change in terms notice; error resolution notice.
(1) Prior notice required. A financial institution shall mail or deliver a written notice to the consumer, at least 21 days before the effective date, of any change in a term or condition required to be disclosed under § 1005.7(b) of this part if the change would result in:
(i) Increased fees for the consumer;
(ii) Increased liability for the consumer;
(iii) Fewer types of available electronic fund transfers; or
(iv) Stricter limitations on the frequency or dollar amount of transfers."

both would require a proper written notice be given in advance of change of terms. It seems it is you who is wrong here Sam.
Predatory Depositor
Predatory Depositor   |     |   Comment #116
Mr. Kiggle is often wrong, but never in doubt.
GreenDream
GreenDream   |     |   Comment #118
Yeah, that's become more clear the more of his posts I read. lol
Sam Kiggle
Sam Kiggle   |     |   Comment #158
" if the change would result in:
(i) Increased fees for the consumer;
(ii) Increased liability for the consumer;
(iii) Fewer types of available electronic fund transfers; or
(iv) Stricter limitations on the frequency or dollar amount of transfers."

Nope, none of that refers to add on deposits. Try reading some more regulations.

Green Dream, you are citing regulations, not laws. And your regulations cite other regulations, which you ignore.

For people who prattle on about individual liberties, kaight and the others sure do lack any self esteem.
GreenDream
GreenDream   |     |   Comment #195
That's regulation E. There there two regulations quoted. The other one, Regulation DD, which more directly applied you conveniently ignored (because you know you are wrong and are simply trolling). As for Reg E, limiting your ability to transfer of money from Unlimited to 6K might apply (iv in regulation E) or it might not (that would be for lawyers to argue before a judge to determine - which is how the legal system works). claiming it doesn't without giving any basis, while your favorite tactic, doesn't make it so.
Kaight
Kaight   |     |   Comment #67
You are obviously correct, deplorable 1, about need for 30 days of notice. However, not certain you are correct about use of email. Based on my experience, the notice must be formal in nature. I'm pretty certain they must snail mail the notice. Also, there is another wrinkle:

Any FI giving such notice is in trouble and is seeking to limit add-on deposits. With mailed notice the 30 day clock commences to run with the date of mailing. This is an advantage for the FI. There is another wrinkle:

The 30 day requirement means 30 calendar days, NOT 30 business days. Hence, we account owners can expect notice to be issued forth in such manner as to include the most holidays and non-business days possible. For example, our next 30 day interval of highest jeopardy encompasses the upcoming celebration of Thanksgiving. After that, smart FI management in trouble would seek to use the Christmas/New Year holiday period to give their notice, decreasing as best they are able depositors' ability to add funds during those 30 days.

As a final consideration, in order more protectively to time the required 30 day notice interval, the FI can be anticipated first to do an "illegal" shutdown of the add-on privilege.  By "illegal" I do not mean against the law, but rather contrary to NCUA rules.  Candidly, that is what I thought GTE was doing earlier this week.  I now think that is wrong.  GTE acted solely out of management incompetence.  However:

This has been a learning experience for that same GTE management team.  I seriously doubt they will make the same error twice.  
pgroove_fan
pgroove_fan   |     |   Comment #101
I just checked 3 FIs for which I receive electronic statements. For all 3, the disclosure on electronic statements folds in a clause that ALL official communications may also be sent electronically. Orion, MACU and Citizen's Access were the ones that I checked.

I'm not a member of GTE, so someone else would have to check the terms for them.
Sam Kiggle
Sam Kiggle   |     |   Comment #159
pgroove, you don't have to be a member of a credit union to read the disclosure statement.

It is always available before becoming a member, and in GTE's case, is listed on its website.
pgroove_fan
pgroove_fan   |     |   Comment #168
Right you are, Sam. And I followed the link to the document that alan1 provided. The wording in the GTE document allows them to send all communications electronically, including modifications and amendments. Here is a direct quote:

"
Electronic Signature in Global and National Commerce (E-SIGN)Disclosure and Consent to do Business ElectronicallyAgreement: By selecting the “I Accept” box below, you agree to be bound by the terms and conditions of this Agreement. GTE Federal Credit Union DBA GTE Financial (“Credit Union” or “we”) may modify this Agreement from time to time in its sole discretion, and such modifications shall be effective immediately upon delivery to you in electronic format. You specifically consent and agree that we may, in our sole discretion, provide all disclosures, agreements, contracts, periodic statements, tax documents, credit card and mortgage statements, receipts, modifications, amendments, billing statements and all other evidence of our transactions with you or on your behalf electronically (hereinafter all such documentation is referred to as “electronic record(s)”).
"
Sam Kiggle
Sam Kiggle   |     |   Comment #169
Yeah, obviously. All communication can be done electronically.

That does not mean that any communication sent electronically is legal.

If the credit union sends you an email telling you to burn your house down, do you consider that legal?
pgroove_fan
pgroove_fan   |     |   Comment #170
I was only trying to point out that Kaight might be mistaken about USPS or snail mail notification being required. I've made no intentional statement on either side of legality as I'm no attorney.
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pgroove_fan
pgroove_fan   |     |   Comment #228
My related posts are #101, #168, and #170.

I pointed out that the general notification method of an FI can be unexpectedly included within the agreement to accept electronic statements.

Then I pointed out that I would not intentionally make a statement on the legality of things, at least, because I am not an attorney.

That's it. I substantively addressed method of notification, and not being a lawyer. The rest of your statement towards me is grafted together by you.
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Ricochet
Ricochet   |     |   Comment #15
Proper Props belong to -THANK You- lmr959
who broke the news of the Dirty Deed

I'll include Zemo999 and Sylvia
Zemo999
Zemo999   |     |   Comment #128
Ricochet - Thanks for your kind words. I felt it was important to research what remedies might exist to the calumny of GTE trying to make their customers live the consequences of their 'bad bet' (i.e., that interest rates would continue to rise, and they could use the capital accreted by their attractive CD terms to gain large profits by lending it out.) I'm not sure what prompted them finally to 'do the right thing' on Wednesday, but my best guess was that it was the collective 'din' of so many customers weighing in with their outrage. And I think Ken's contacting management from the start carries a great deal of weight. In the many financial institutions I've dealt with, many of them are very familiar with DA, and pay attention to what's said here. So I think Ken carries a good deal of weight in the financial community, and I'm very grateful both to him, as well as all those who got active, and started protesting this unfair change. Wednesday's email restoring the CDs to their original terms was like waking up from a nightmare. I think, had we have to have gone through things like NCUA's (and other orgs. complaint systems), it would've been a long road, without promise of success. Even if a class action suit was brought, and GTE lost, I'd expect they'd appeal the decision and it'd be years before a resolution was found. Perhaps this has been a lesson in the power that consumers actually can have, if they don't stay passive. I'm also greatly relieved to hear Ken's opinion that GTE will be most likely be able to absorb the buden of the add-on cds. Makes sense of some of the speculation that a long legal process might bankrupt them, and perhaps that played a role in taking a lesser hit that is more knowable from honoring the original terms of the CD agreements.
Kaight
Kaight   |     |   Comment #66
Hey thank you, Decades, for the kind mention. I always thought nobody pays any attention at all to what I post here. I still think that, but now with the exception of Decades. :-)
deplorable 1
deplorable 1   |     |   Comment #72
Actually I find your posts pretty informative and insightful Kaight.
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CDmanFL
CDmanFL   |     |   Comment #13
Let’s all just hope that inflation picks up and the Fed stops lowering interest rates. If that happens, this whole thing will be moot because there should always be some bank or credit union that will offer 3%+ on a 5 year CD. In the meantime, I’ll be utilizing my multiple GTE CDs for additional deposits. It’s a happy day in the neighborhood!
deplorable 1
deplorable 1   |     |   Comment #19
Amen to that! Hopefully the real inflation will get reported this under 2% for a decade is total nonsense anyway.
Bill Barr
Bill Barr   |     |   Comment #25
We don't want inflation to pick up!
CDmanFL
CDmanFL   |     |   Comment #31
Oh yes we do. If it doesn’t pick up and the Fed continues to lower rates, savers will be ****ed.
jib2424
jib2424   |     |   Comment #60
Inflation ruins the value of our savings and puts our savings into a higher tax bracket. How do you figure we want inflation?
pwj7050
pwj7050   |     |   Comment #48
We do want inflation to be a steady 2% or slightly higher so the Fed won’t slash rates, but instead normalize the Fed Funds rate to a higher that 3.5 - 4% level.
Kaight
Kaight   |     |   Comment #68
Well stated, Bill Barr. For us savers the best outcome is zero inflation and modest interest rates. Why? Because higher interest rates prompted by higher inflation push all of us into ever higher tax brackets. Taken to not all that much of an extreme, things can become even much worse as we enter kicking and screaming into IRMAA territory. For anyone unaware of the IRMAA trust me: you don't wanna go there!!

Anyway bottom line Bill Barr is right: paying huge tax on inflatodollars is just stupid!
Y??
Y??   |     |   Comment #69
Bill and Kaight are correct. Those that want inflation really don't understand economics and how money already saved is devalued by inflation.
deplorable 1
deplorable 1   |     |   Comment #73
I respectfully disagree I prefer enough inflation to get the FED to hike interest rates which boosts my earnings far higher than the cost of the inflation. Inflation does not effect everyone exactly the same. In the past I did far better with higher inflation and even higher interest rates that beat it.
CDmanFL
CDmanFL   |     |   Comment #79
Dep 1 is 100% correct and this is from someone who disagrees with him politically.
GreenDream
GreenDream   |     |   Comment #122
Y??, it's those that only look at part of the economic picture that really don't understand economics. Inflation where everything else (such as interest rates) remain unchanged would indeed devalue a savers money. Inflation where other things (such as interest rates) might not. Should interest rate increase by even more than inflation increases, savers would be end up with more value than had inflation and interests not increased. let use some numbers to illustrate:

if a saver has $100, inflation is zero and interest is 1%, their money would grow in to be $101 (since no inflation real value is also $101) for an overall increase in real value of $1

now image a saver has $100, inflation is 2% and interest is 4%. their initial $100 is now $104, however real value of that money is $101.92 in pre-inflation dollars, that's a real value increase of $1.92 nearly twice as much as the original scenario.

increasing inflation alone would be bad, no argument there. increasing inflation with interest rate increasing to more than offset the increase in inflation would be good for savers.
Y??
Y??   |     |   Comment #137
Agree, GreenDream.
Predatory Depositor
Predatory Depositor   |     |   Comment #80
1. Tax brackets are indexed for inflation. So earning inflated dollars doesn't necessarily mean inflated taxes all else being the same.

2. It's a mistake to only consider the things that immediately affect savers when formulating economic policy. Even savers who only advocate for policies that narrowly take into account the interest of savers are not doing themselves a favor. Your savings mean nothing if the economy around you collapses. A moderate but not zero rate of inflation that remains stable is desirable for everyone including savers, because that's the environment that's conducive to economic growth.
GreenDream
GreenDream   |     |   Comment #109
It's a bit more complicated than that Bill. Certainly we don't want higher inflation if interest rates remain low. On the flip side, however, higher inflation that results in interest rates that are even higher would be in savers interests. Whether we want higher inflation entirely depends on whether we get higher interest rates that more than cover it or not.
Predatory Depositor
Predatory Depositor   |     |   Comment #119
Right #109. What you are referring to is called positive inflation adjusted return. This is what benefits savers most. And these are most likely to be realized in an economy with moderate inflation that remains at a stable rate for long periods of time resulting in real growth of the economy. If you want to be better off, support policies that lead to economic growth. And those policies are lower taxes, fewer regulations and less government spending. That applies to everyone, saver or spender, rich or poor, butcher, baker or candlestick maker. A rising tide floats all boats.
deplorable 1
deplorable 1   |     |   Comment #136
Right PD and which party and candidate most closely align with those policies? Trump and Republicans. Have they cut enough spending? Definitely not but the other side only has plans to increase spending 10 fold. It's amazing that so many people on here want higher interest rates but refuse to support the very policies that cause rates to rise.
What we really need to do to keep rates at a higher level is to start paying down the debt. Neither party seems to want to tackle this issue because it would involve stopping the handout programs which is what got us in all this debt in the first place.
Predatory Depositor
Predatory Depositor   |     |   Comment #145
Agree with that all dp1. I'd like to add something to that.

What's important in terms of the national debt, is not it's absolute size, but it's size in relation to GDP. So if you can find a way to grow the GDP the debt becomes less of a problem. I believe that the current president is doing the best that can possibly be done in that regard, slashing regulations, and lowering the tax burden. The best that can be done that is in the current political environment. If he were to get some cooperation however I think we would already be well into the strongest economy the country has ever seen. That would make the debt less onerous to bear.

National debt while too high in relation to GDP is not the real problem, the real problem is the unfunded liabilities, in the main Medicare and Social Security, that are children and grandchildren will have to fund.

Politicians have been skilled for a couple of generations now in how to use unfunded liabilities to prophet politically now and have someone else have to pay the bills later. The problem is, it's now later.
Ricochet
Ricochet   |     |   Comment #171
"Politicians have been skilled for a couple of generations now in how to use unfunded liabilities to PROPHET politically now and have someone else have to pay the bills later. The problem is, it's now later."

That slip of the tongue has much more true meaning in reference to Politicians
Good GTE
Good GTE   |     |   Comment #16
I filled out a formal complaint with the NCUA, and they forwarded it to GTE within 24hrs.
I'm glad GTE decided to do the right thing.
They may get more funds than they want at 3%, but GTE is big enough to survive. (Even with a $250,000 cap per person, Sharonview must have received literally millions in deposits at 4%, and they still have an "A" health rating).

In the end, it was the only thing GTE COULD do if they wanted anyone to have any faith in them as an institution. After all, a depositer wouldn't be allowed to (sucessfully) demand that GTE allow them to close a CD early without penalty, because, for instance, their work hours got cut. Contracts need to mean something. In the future, if they re-instate Add-On Promo CDs for more than $6k/yr again, they will likely put a balance cap on Add-Ons -- which is fine. As long as everyone knows the conditions going in -- and honors those conditions.

Glad GTE did the right thing. I feel better about using them more now.
CDmanFL
CDmanFL   |     |   Comment #26
Unless millions upon millions of dollars are added to these CDs, I can’t see GTE having major problems. It’s a fraction of the population that has savings and even a smaller percentage that even know about GTE or this particular product. And if GTE ran into problems, chances are they would be taken over by another CU who mostly likely would honor GTE’s liabilities. I for one am not worried.
Att
Att   |     |   Comment #34
#26 If GTE fails the institution that would take over would most likely not honor an open ended add on feature and probably not the rate if current rates continue to drop. I was surprised when Penfed honored Valors rate.

#16 Sharonview was a limited time CD with no add on feature (Connexus had a 4% 5 year CD recently too with no add on).

GTEs problem is that have an open ended add on in a declining rate environment. They may be overwhelmed if they have a large inflow of funds. The Treasury 10 year note yield is 1.594% today.
lou
lou   |     |   Comment #41
Valor did not fail. Penfed acquired them, and, consequently, did not have the ability to lower the rate.
Att
Att   |     |   Comment #64
lou You are right. But Valor was in bad shape. In 2017 Valor reported net losses of $2.4 million and $2.25 million in last year’s second and third quarters, according to Call Report data. They also had issues with their CEO Jelwn.

If Penfed didn't take them over they would have failed.
AhorrarDinero
AhorrarDinero   |     |   Comment #70
CDs that where transferred to PenFed were transferred at the existing Valor rate and term.
gregk
gregk   |     |   Comment #32
"Right thing" or not, GTE is still a crappy Financial Institution in my estimation.

No way would I ever do business with them.
mffarrell
mffarrell   |     |   Comment #23
So, who here will want to trust them now?
CDmanFL
CDmanFL   |     |   Comment #24
I don’t need to trust them. I trust the NCUA. Our principal is safe.
pgroove_fan
pgroove_fan   |     |   Comment #38
CDmanFL, yesterday in post #202 you were worried about the 3% interest to live off (of). You should maybe remember that before sticking all of your "maturing soon" funds into this GTE product.

That GTE considered this maneuver so early in the promotion's long life, I don't consider it all that unlikely that they will be searching for some other mechanism to limit their potential losses.
Mike
Mike   |     |   Comment #40
CDmanFL, NCUA may also close this CU for not following the NCUA interest rates guidance and if they show loses on the quarterly statement, they will be gone.
CDmanFL
CDmanFL   |     |   Comment #42
Mike, the last thing the NCUA wants is to clean up this mess. Maybe the GTE Board will be so ****ed at management that they will sell the CU to another. 
pwj7050
pwj7050   |     |   Comment #49
“Trust but verify!”, Ronald Reagan
ddbrege
ddbrege   |     |   Comment #29
Does anyone want to bet on how long it will be before the holders of those "unlimited" certificates get a formal written notice in the mail detailing any changes they plan on implementing?
gregk
gregk   |     |   Comment #35
Agree with your implication. Whatever the modus, no way will GTE allow unlimited add-ons to these already established 5 year Certificates for the duration of their term if rates keep sliding.
CDmanFL
CDmanFL   |     |   Comment #54
Yes, let's make a friendly bet. They will honor this to the end, unless they merge with or sell to another CU.
Thank You
Thank You   |     |   Comment #33
Dear Ken
Thank you Thank you Thank you. I don’t know where I would be without your outstanding website. More so I am not sure they would have capitulated had you not gotten involved. I can’t thank you enough - always sticking up for the the little guy and doing thorough research on many subjects that may impact us financially. Thank you - you are always much appreciated
From a hard working investor just trying always to get the best return on the money I work hard to make every day
Dunmovin
Dunmovin   |     |   Comment #36
No need to worry about GTE...they will take the funds and loan to unsuspecting seniors moving south to buy some of that swamp land in Florida
Mike
Mike   |     |   Comment #37
Ken has nothing to do with it, it is the customers (thousands of them) who complained back. That does not means the GTE will not do some other manipulations or changes like, limiting the amounts deposited or withdrawn or not allowing closing of the CD until the full term and other mischievous acts, it is written in their agreement that they reserve the right to change anything about this CD, read it first, it is in the disclosure.
pwj7050
pwj7050   |     |   Comment #50
I think you’re being a little tough on Ken. At least we have this forum, that he created, to be informed about many banks and communicate with each other.

Have you checked out Bankrate.com, the site that is always referenced by the press?

The site is offensively devoid of thorough information!
Berry
Berry   |     |   Comment #84
pwj7050, so, you think Ken called and they reversed it at once. There is an old saying, do not elevate the wrong person, it will look down on you when praised for nothing.
Be realistic, I respect Ken, but he did not reverse the CD rules.
CDmanFL
CDmanFL   |     |   Comment #87
There is no better advocate for us than Ken!
GreenDream
GreenDream   |     |   Comment #111
Berry while I don't think "Ken called and they reversed it at once", I do think Ken was part of the solution by advocating on savers behalf. so props to Ken.
Hooked
Hooked   |     |   Comment #121
I am with comment #111. Ken has no ‘responsibility’ to us as these are our own decisions. Ken put it lightly as to what he may have done but I thank him for advocating on our behalf.
CDmanFL
CDmanFL   |     |   Comment #39
Why all the pessimism? GTE would not have sent the reversal notice today if they intended to reverse course again. They would have done it today and put this to bed once and for all. They will honor the unlimited add on terms through maturity, especially after the **it storm they just went through. Imagine the backlash if they tried doing this bait and switch again. They will simply endure this pain to keep their reputation from tattering further.
Mike
Mike   |     |   Comment #43
Forget the reputation, if they show loses the next quarter, the NCUA might close them down for not being in the approved range for the CDs regulated by the NCUA. Imagine the cost to the insurance fund should millions upon millions of dollars are pored in and the GTE can not invest the money anywhere for those rates given to the customers, the loses will be tremendous.
CDmanFL
CDmanFL   |     |   Comment #45
I think the NCUA would find a buyer for GTE and that buyer could terminate these CDs. This is the most likely scenario IMO.
pwj7050
pwj7050   |     |   Comment #51
I hope you’re right, Mr. Sunshine ;-)
deplorable 1
deplorable 1   |     |   Comment #76
I hope you are right CDman but I wouldn't be surprised to get a formal letter in the mail one day giving us 30 days notice of upcoming changes. Hopefully that will be at least 2 years down the road after some of my higher yielding CD's mature ;)
CDmanFL
CDmanFL   |     |   Comment #81
For me personally, I need this to last about 8 more months to roll in some maturing CDs. I suspect it will. If they would ever invoke this 30 day clause, I don't think it would be anytime soon. They need to let the flames die down from the firestorm they created. Sending such a letter now, or within the next year, would make GTE look like an even bigger clown show after telling us yesterday to ignore the hours-earlier email.
Predatory Depositor
Predatory Depositor   |     |   Comment #88
Survival is a higher and more immediate priority than public image. The lower rates go the more deposits are likely to flow into the add-on accounts. If rates decend to as low as they were in the last presidential administration, and GTE ends up with a billion dollars or more of new liabilities at 3% + on their balance sheet, public image will be the least of their concerns. Unless their CFO is as incompetent as the rest of their management seems to be, he must be sweating bricks right now.
Att
Att   |     |   Comment #123
Or they can take a wait and see approach and once they get near a funding goal they can send out letters. The board has a fiduciary responsibility to keep the institution solvent.
Jen
Jen   |     |   Comment #74
Is a credit union allowed to change the rate on a certificate after it is issued?

This is just a theoretical question. I keep reading people saying that they can "change anything they want" with 30 days notice, etc. Are they allowed to lower the rate by giving notice?
Kaight
Kaight   |     |   Comment #77
Excellent question, Jen. My posts relating to rescission of add-on privileges are based on my personal experiences at Valor and at USCU, both of which Ken mentioned in his writeup. But I have no personal experience with a FI seeking to lower an interest rate. Just sort of thinking out loud:

A FI wanting to lower an existing CD interest rate probably has too much money in its coffers for its current economic circumstances. I would expect, therefore, the FI offering a penalty-free withdrawal option as an alternative to our accepting the lower rate.

But aside from that, I see no regulatory impediment to a FI lowering a CD's interest rate but only after offering proper notice. Of course there would be a HUGE public relations penalty for them to endure. That's probably the principal reason such rate reductions almost never happen.
deplorable 1
deplorable 1   |     |   Comment #78
I don't think they can legally lower the interest rate on a existing CD even with formal notice.
CDmanFL
CDmanFL   |     |   Comment #82
Totally totally totally agree with Dep1. They CANNOT. Period.
Berry
Berry   |     |   Comment #86
deplorable 1 and CDmanFL, not true, if in the disclosure it is not written that the rates can not be changed under any circumstances then they can be changed. NCUA or in case of a bank FDIC, can force a FI to obey the rate guidance given to them monthly. If the CU can not service the liabilities from the CDs, it may be sold or closed.
Sam Kiggle
Sam Kiggle   |     |   Comment #89
So, GTE can change any term, unless it states it cannot change the terms.

How about if they say they can't change the terms, then send you a post card saying they can change anything they want.

If a credit union notifies you it wants your baby, do you consider that proper notice?
CDmanFL
CDmanFL   |     |   Comment #95
I stand by my comments. A CU or bank cannot just decide one day, let's null and void all our 5 year CDs because interest rates dropped. Just like I can't null and void my mortgage loan because I found a better deal somewhere else. And if a CU or bank ever did decide to null and void all their 5 year CDs, then this is the end of the banking system as we know it and we're back to the Wild West days. I have all my money in 5 year CDs and I'm not worried one iota.
Att
Att   |     |   Comment #98
#95 With most mortgages you can refinance at anytime. When I bought my home I had an 6 1/8% mortgage and have refinanced 2 times and I now have a 3.25% mortgage.

I hope that GTE can continue to operate. If rates continue to go down their finances will come under pressure if they have to accept deposits that pay high rates. But if rates go up in 2021 like D1 predicts if his cousin Trump wins the 3% may be a good move.
GreenDream
GreenDream   |     |   Comment #113
Yes you can refinance at anytime, but you actually have to go through the refinancing process in order to do so, you can just unilaterally declare "from now on I'm playing a lower rate" and expect the institution holding your mortgage will say "fine".

Similarly, there's a process for financial institutions to change certain terms and it involves more than just unilaterally declaring at a moments notice that they're changing the terms effective immediately (unless they've said upfront that those terms are subject to such immediate changes, such as rates being variable for instance).
Att
Att   |     |   Comment #125
#113 All depends whats in the deposit agreement. Just like credit cards, If you don't like the terms cancel the card and if you have a balance pay it off.

Also. you can just payoff your mortgage if you no longer like the terms. I did that on a mortgage that I had previously.
deplorable 1
deplorable 1   |     |   Comment #135
I paid off my mortgage with a credit card using a 0% no fee 18 month balance transfer. Not directly I had to get the bt cash in the bank first.
GreenDream
GreenDream   |     |   Comment #117
I don't think they can legally lower the interest rate on a existing CD even with formal notice

depends on the CD. If the CD has a adjustable rate, they can change the rate as specified in the agreement (for example if they specified that the rate is indexed to Treasury rate + 0.50% evaluated quarterly, then if the rates go down, come the next quarter they can lower the rate). But if it's a fixed rate, I don't think they can change the rate willy-nilly. They could choose to close out the CD (and if you read the fine print they usually have wording to along the lines of reserving the right to do so at anytime) but they can't just change the agreed upon fixed rate (If they could it wouldn't be fixed, now would it)
Sam Kiggle
Sam Kiggle   |     |   Comment #160
Green Dream is wrong of course.

If a CD disclosure states it is a variable rate, it is not a change of terms to apply that variable rate.

Silly nonsense.

But what about regulation D and regulation EE? Please Green Dream, what is it?
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Predatory Depositor
Predatory Depositor   |     |   Comment #85
The banking industry is the most regulated industry in the country. The rules governing banking are complex and multi-dimensional.

Credit unions and banks are subject to federal regulations, state regulations, FDIC or NCUA rules, and the policies and documents of the institution itself. Anyone who speaks with certainty with regard to the legality of what GTE Financial may or may not do is a fool. Even if they had the requisite legal ability to interpret the facts, no one here knows enough facts to be able to draw such conclusions. The discussion is entirely speculative.
Sam Kiggle
Sam Kiggle   |     |   Comment #90
In reality, GTE's legal requirements for its CD products fit onto a single page.

Not complicated, complex or multi dimensional.

Of course, we live in a country where Americans are lethargic and would rather prattle on the internet than read a piece of paper.
GreenDream
GreenDream   |     |   Comment #114
their legal requirements are still beholden to the financial regulations that are on the books - which amount to much, much more than a single page.
Sam Kiggle
Sam Kiggle   |     |   Comment #161
Green Dream, have you read the disclosure statement?

What aspect of it do you think is illegal? Or violates any regulation?
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Milty
Milty   |     |   Comment #75
Just want to add my thanks to Ken and all the rest of the gang here who contributed to informing us as well as pressuring GTEF to do the right thing.
CDmanFL
CDmanFL   |     |   Comment #83
Again, all this pessimism is driving me mad. Yes, GTE did the wrong thing (illegal, unethical, etc.). However, they then did the right thing by reversing course very quickly. Don't assume they will do the wrong thing again. As I mentioned before, and as Ken has also indicated, they are in decent financial shape. Look at the Bauer star rating. It is 4/Excellent. I'm sure many of you have CDs at banks or CUs with lower ratings. I for one have zero hesitancy to continue to add to my GTE CDs. I doubt seriously if they will invoke their 30-day clause of limiting add-ons, but if they do, it's probably many many months or a year or two in the future. Relax people!
Svensk
Svensk   |     |   Comment #91
Just had an interesting experience with GTE. I had opened five of these CDs with varying length. GTE pulled $500 five times from my source to fund the accounts. Reviewed my Sept statement. One CD showed a ZERO balance!!!! Called and was promised a call the next day which never came. Noticed they finally funded the CD. Still see no credit for interest earned. Such haphazard accounting makes me very wary of GTE!!!!!!!!!!!!
CDmanFL
CDmanFL   |     |   Comment #96
Yep, they're a Mickey Mouse outfit. I'm still not worried though. Got the NCUA backing. That's all I need. I'll put up with a lot of nonsense to get 3.3% these days.
Rate Seeker
Rate Seeker   |     |   Comment #105
Same thing happened to me. I opened two add'l $500 certificates on 8/23 and 8/24, funded them with my debit card, and though the certificates showed $500 in each originally, they did not debit my bank account. So several weeks later, I noticed that they took the two $500 balances back and I had two certs with $0 in them. (!) Their fault, not mine. So I transferred $1000 to my GTE share acct myself, as a rep had told me via Chat that the certs were still open.
After waiting about a week to complete an external acct to transfer the funds (they take up to a week at GTE, not 2-3 days like most FIs I've worked with), once the funds were there, I tried to transfer them into the 0 balance certs. It wouldn't work. So after another Live Chat, I was able to have GTE transfer the two $500 amounts into the two certs, and they said that when you add into the certificates for the first time, GTE has to do it, but after that the customer should be able to do it themselves online. Seems weird to me, but that was what I was told. I have yet to add add'l funds in the other three certs I have with them, but just wanted to let people know they may experience problems initially trying to add-on. Or maybe I got bogus information from GTE, again.

I cannot say I am happy with their competency, and I am nervous about what they will do in the future. My hard-copy certificate papers I rec'd in the mail do say that the Promo CD add-ons have no cap, which is what I went to when I rec'd that first email. I had thought at that time that they were referring only to their existing add-on certificates and was surprised to see the second email saying to disregard the first one.
CDmanFL
CDmanFL   |     |   Comment #100
MESSAGE TO KEN: If you read through this thread, folks are commenting or implying that banks and CUs may unilaterally change the terms of CDs after they are issued if rates decline. Seems like hyper-paranoia and pure absurdity to me. Maybe this was acceptable in the Wild West days or in North Korea, but I can't imagine this being even remotely true. I'd love to get your take on this. Say we go negative on interest rates in the US, can banks and CUs decide one day to terminate all their long-term CDs and return the money to the depositors? It would seem this is as felonious as robbing a bank, but in reverse.
94333
94333   |     |   Comment #103
How many of you folks actually have a GTE account? About four?

You might want to go out and get some exercise.
CDmanFL
CDmanFL   |     |   Comment #104
94333, you made my point. It's not like everyone on the planet has on the add-on CD. It's a handful of folks, relatively speaking. Stop the worry and paranoia people!
Predatory Depositor
Predatory Depositor   |     |   Comment #115
Marcus Goldman Sachs just dropped their savings rate from 2.00% to 1.90%. That's unfortunate, but what I love about this bank is it's transparency. They even send you an email when the rate is *lowered*. They are about as upfront as it gets... no surprises. The opposite of a GTE Financial. And their online systems and signup process are first rate too. Considering that Ally dropped to 1.90% at least a month or more ago, it isn't the worst performer.
Kaight
Kaight   |     |   Comment #120
I have been a GTE member for the last two years. During that time I have had extensive dealings with them . . . have done a lot of business there. I have found everything about GTE to be foursquare, honest, and good. I've no complaints at all.

I do admit this most recent flap was handled a bit hamfistedly. But this incident is very much an exception to an otherwise sterling track record. I will not condemn GTE for a single mistake amidst excellent performance regarding every other aspect of my business relationship with them. GTE is a good outfit and I wish them well.
RickZ
RickZ   |     |   Comment #129
Following up on Kaight’s comment, I have also dealt with GTE for a few years and have found the credit union, and particularly the folks in the application department, to be competent and honest. That being said, GTE clearly made an amateurish business decision when they decided to offer an add-on CD with no limits, and there’s no question that their recent attempt to cancel the add-on feature was outrageous.

While I in no way want to be seen as defending GTE's behavior, I was told that when the FED started lowering rates, GTE had several members who had recently opened add-on CDs add huge amounts to their CDs – I was given the figures of $2 million, $7 million and $10 million. This seems crazy to me given the insurance limits. In any case, this whole fiasco could have been avoided if GTE had just put a reasonable per person cap on their add-on CDs at the start.
Kaight
Kaight   |     |   Comment #138
RickZ great post, which gave me a thought. Of course GTE management should have capped the add-on accounts. Leaving it open-ended was foolish. But it occurs to me they still can apply a cap after giving 30 days of notice. Sure some folks would squeal . . the very rich among us. But a million dollar cap, for example, would bring no outcry from me. And it would provide great protection for the vast majority of GTE members. I hope GTE management sees this and gives the idea some consideration. Imposed now with proper notice, what most of us would regard as a high cap would not result in the groundswell of resistance GTE had to deal with this week.
Dunmovin
Dunmovin   |     |   Comment #139
Of course how the beneficiaries are set up work as a cap for most b/c of NCUA insurance limits
Predatory Depositor
Predatory Depositor   |     |   Comment #146
#138
So it becomes magically ethical to change the agreed terms as long as you're only ****ing a few wealthy people? As long as it's only ****ing somebody else and not me I'm fine with it?
Ricochet
Ricochet   |     |   Comment #147
The XXXX Million dollars plus Rich buying CDs, who'd a thunk.

Let them eat cake
Y??
Y??   |     |   Comment #148
Not to get excited, Ricochet. "Hear say" xxxx millions don't amount to squat.
I'M THE MAN
I'M THE MAN   |     |   Comment #149
And Jerry FATBOY NADLER?
Sam Kiggle
Sam Kiggle   |     |   Comment #165
#146 so Predatory Depositor thinks it is fine for big companies to act illegally to protect themselves.

But when humans want to engage in the same behavior he resorts to expletives.
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lou
lou   |     |   Comment #150
Who gave you these figures?
Anon
Anon   |     |   Comment #164
What insurance limits? $10 million would be protected by NCUA just fine if you provide 40 beneficiaries for that CD.
mffarrell
mffarrell   |     |   Comment #124
Why do all my certificates show 0% interest? I have requested twice to have GTE correct this error, but the have not!
mffarrell
mffarrell   |     |   Comment #126
Because eventually plan to take their rates down to 0%. I do not trust them anymore.
Zemo999
Zemo999   |     |   Comment #131
I've often received cert disclosures with wrong interest rates, duplicates, but with different add-on terms, and so on. If you keep bugging them, they'll eventually likely get it right. In the meantime, I've gone into my certs on their site, where the information appears to be the most correct version, and printed out the terms listed - e.g., interest rate, length of term, etc. At least it gives you some paper record until/if they get you a corrected disclosure.
Predatory Depositor
Predatory Depositor   |     |   Comment #141
Always good to keep a good paper trail. If the institution you're dealing with is incompetent or felonious, who even knows if their own records are accurate. If they should be shut down, you may have to show records to prove what you owned.
Att
Att   |     |   Comment #127
If they keep ****ing people off they will go under.
DCGuy
DCGuy   |     |   Comment #133
Then another financial institution will take over and then change the T & C for all accounts taken over.
Shelby
Shelby   |     |   Comment #132
If GTE is sincere about honoring the original terms of the Promo add On CD's going forward...they need to amend the New share certificate account Disclosure they put up on heir website Friday 9/27. Go to GTE's website and drop down to bottom of page and select disclosures then select Share Certificate Disclosure from the list. Until GTE changes the promo certificate terms back to the original promo terms that were offered to members I wont do any business with GTE.
deplorable 1
deplorable 1   |     |   Comment #144
They won't do that because they ARE changing the terms for the new CD's going forward. The best we can do is to save the old terms and emails and hope they stick to the deal. BTW can we be respectful please?
me1004
me1004   |     |   Comment #134
I think their lawyers might have realized they had a serious legal issue with the change. When they write that “Add-On option available in deposits of $20 or greater throughout the term of the certificate with no cap,” that has to be read together with the clause saying terms can be changed at anytime. A court would be unlikely to rule that "throughout the term of the certificate with no cap" does not necessarily mean "throughout the term of the certificate." They did not make that statement about "throughout the term" for other details.

I'm glad they changed it back. But whether that was in good faith or after realizing they were in real legal trouble, I'm not so sure. At any rate, they clearly demonstrated they were willing to do it, thought it was OK. And that is not the kind of people you want to rely on. You want people who would never consider that something reasonable to do. So take this incident as a warning of who you are dealing with there -- you might be wise not to deal with them any more - until they change the people in charge.
CDmanFL
CDmanFL   |     |   Comment #151
I’d like everyone to think of this. Let’s say that because of GTE’s decision to allow for unlimited add-ons, they get $50,000,000 in new deposits. If that costs that an additional 1% over what they should or want to be paying, that’s only $500,000 per year. Not so lethal when you quantify their mistake. Stupidity on their part? Yes. Will it bring them down? No. Not even close. Therefore, I fully expect them to continue to honor their unlimited add-on certificates for the full duration. Nothing at all to worry about, friends.
Anon
Anon   |     |   Comment #152
3%. No, they can send out email anytime, I suspect sooner then later in the next 5 years and give us thirty day notice there will be much less uproar case closed. So no I won’t guess, assume etc etc etc what everyone else is doing and cont to fill up my add on ASAP til I max out under insurance coverage and say thank you I’m done worrying about this. I suggest we all do this and stop guessing what others will do.
CDmanFL
CDmanFL   |     |   Comment #153
Still betting on them to fully honor their commitments. Don’t think they are so ignorant. If they wanted to do it, they would have done it in the second communication in which they said will allow unlimited add-ons. I’m not expecting another reversal. They have ample capital to absorb this mistake. Just look at how much they made in net interest income last year. Yes, it will be much lighter but nothing they can’t handle. All this nonsense about a 30 day letter is driving me mad.
Att
Att   |     |   Comment #154
#151 50 mil is actually low for such a large CU. XCEL CU a few years back had a CD special. When I called the CU they told me the offer would end at 21 million. The institution has about 200 million in assets in 2019.

Only GTE knows how many CDs they have with add on and the possibility of what funds my flow into the CU. Many here opened many bare minimum accounts of $500 that have the potential of being 250k insured accounts and all insured if titled properly. If rates go down to near 0 like we had a few years ago people will be adding a lot of funds to their add ons to make over 3% which is a great strategy. I maxed out my MACU 3.51% to the max 100k less the $10 a month required deposit.

If the impact is so small to them like you observe, why would people with expertise in the field want to cap the open ended add on feature and cause people to complain to regulators and get bad publicity? Why do most other institutions put caps on add ons?

Also, D1 may be right that in 2020 rates fo up?

I don't think GTE will go under but you have to take the information here into account.
Anon
Anon   |     |   Comment #166
@ATT #154, my understanding is that after you max out MACU 100k CD you no longer need to do $10 /month (maybe even cannot??)
Att
Att   |     |   Comment #167
Anon aNot sure. Just kept under 100k to add $10 a month for 5 years
MY2CENTSWORTH
MY2CENTSWORTH   |     |   Comment #172
I'll give you what I know from my experience with MACU and that is once the add-on becomes maxed out (not including interest/dividends) in this case 100K the monthly deposits are stopped automatically and you are not allowed to deposit any additional funds. Possibly some others will chime in as well. If you have the $600 available my opinion would be to put it in and gain the interest on that amount as well over the 60 months or whatever is remaining in your specific term. It won't be a huge sum of additional interest but if your plan was to max it out I can't see any reason to do the $10/month.
Att
Att   |     |   Comment #173
#172 One of the requirements was you had to make at least a $10 deposit to the account monthly to get the 3.51%.

Another strange thing is that when I do any transfers to my CD initiating from MACU and specifying the CD the funds go to the required savings account. So I just do the transfer from savings to CD which happens instantaneously.
MY2CENTSWORTH
MY2CENTSWORTH   |     |   Comment #176
You're correct, that is/was a requirement that a minimum of $10/month be added, but again, once the $100K threshold is achieved that requirement goes away which limits your total deposits to the original $100K limit.
pgroove_fan
pgroove_fan   |     |   Comment #179
Att at #173. Fortunately, if you set up the transfer from savings to certificate to occur automatically each month, it does not count against your limit of 6 transactions for Regulation D. If you perform the transfer manually, it does count against Reg-D.

I opted for the 4 longest duration add-on offers from MACU so as to be best positioned for a variety of future market rate possibilities. Losing 4 Reg-D transactions each month would have left me having to keep a closer eye on things with MACU.
aiasantha
aiasantha   |     |   Comment #175
Does the 100k limit is on funds deposited only, or does it include the interest credited to the CD as well. If the second is the case, then the calculation of how to keep it under 100k is more involved.
MY2CENTSWORTH
MY2CENTSWORTH   |     |   Comment #177
The $100K maximum is on funds deposited ONLY. They actually made it pretty easy and I have had good luck with them except they don't return a call back when they say they will.
MY2CENTSWORTH
MY2CENTSWORTH   |     |   Comment #178
@Anon, your understanding of the way the add-on at MACU works is spot on. You cannot add more than the limit which does not count interest/dividends.
GregNYC
GregNYC   |     |   Comment #180
Yeah, I agree with Ken and CDmanFL. Even if the add-ons total $100 million and it costs them 1.5% more than market over the five years, that's "only" a $1.5 million yearly hit to profitability. Their net income is about $10 million a year. So it shouldn't kill them.
CDmanFL
CDmanFL   |     |   Comment #183
Amen Greg. Beautifully scripted.
Sam Kiggle
Sam Kiggle   |     |   Comment #162
The most interesting thing about this experience is how quickly the people who prattle on about individual rights and liberties are so willing to subserve to a corporation which is obviously violating the terms of a basic contract.

The only sillier discussion on here I can recall is whether FDIC / NCUA cover accrued interest
Sam Kiggle
Sam Kiggle   |     |   Comment #163
Why would anyone who genuinely believes a company can send a post card and change the maturity, interest rate, stop paying interest entirely, add unlimited fees, invest in a CD?

Is it just a way to justify lethargy and apathy? Do you feel that supporting big companies which treat you badly somehow makes you less a victim?
keithsanfran
keithsanfran   |     |   Comment #174
I have never experienced such incompetence and need to supply extraordinary details of my personal financial life as I did with GTE. I cancelled my application mid-process after seeing what it was like to deal with them. I have no money on deposit with them and I am very glad about this. I do not trust tthe with my life savings.... ..no way...... I have an add on account with Mountain America up to the very reasonable amount of $100. MACU service has been excellent. I have compete confidence in them.... GTE falls into the category of TGTBT.... Sure it might work out, but five years is a long time. I'd hate to wake up and find out their unlimited add on was Too Good To Be True No thanks.... I buy CD so I can sleep.
Gomer
Gomer   |     |   Comment #181
The best way to receive relief in these cases is to take legal action. Many credit unions nowadays include arbitration clauses in their member agreements. While these clauses prevent class actions that can hold institutions to account for everyone, they also make it very easy for an individual member to get the institution's attention. Often the costs of arbitration will greatly exceed the amount of individual relief that a single person is seeking.
Mayan
Mayan   |     |   Comment #182
It was always insurance for me as I opened a few add ons with $500. If the terms haven't changed in 3/4 years i may use the 5 yr. I have a 5 year i opened in December earning me 4.32...others that range from 3.50 to 4%. I have also used GTE with a cc using the 3% cash back...amounting to so far about $1 k tax free...they are still a knucklehead cu.
Anon
Anon   |     |   Comment #189
@Mayan, curious where you opened you 4.32% add on in December what which card has 3% cash back (when used as purchase for funding new accounts)?
Mayan
Mayan   |     |   Comment #203
Anon - I would divulge more info however I have learned that too many here spoil a good thing for others using info that is posted on this site. Remember some cu's also offer a bonus to senior citizens/loyal members that can pull up a 4.0/4.10 rate even higher which was my case.The credit card offer is no longer avail at this time however there are plenty of 2% cards out there.
Anon
Anon   |     |   Comment #212
Thanks Mayan, I figured since both of those offers are now gone, it might be "safe" now to say what they *were*. Might serve as example for me in future and with over 200 messages on this board post, doubt many people will see it in the middle of all these ;-).
CDmanFL
CDmanFL   |     |   Comment #184
Friends, please advise me on this. I’ve read various posts about how some of you are using a credit card to make deposits into your add-on CD at GTE. Do you need a special type of credit card to do this? Does it get coded as a cash advance or a normal vendor purchase? Do you do this with a Rep over the phone? What’s the best type of credit card to use for this purpose? And if I want to add, say, $25,000, is there a way that I could do all of this via credit card? If someone could kindly explain how to do this, I’d be so appreciative. Thank you!
Ricochet
Ricochet   |     |   Comment #185
Just type deporable 1 in the search box and you will
find posts leading to the CC Funding College Seminar ;)
CDmanFL
CDmanFL   |     |   Comment #186
Hoping Deplorable can give us a refresher course here so I don’t need to go on a scavenger hunt. Brother Deplorable, you out there?
Sam Kiggle
Sam Kiggle   |     |   Comment #187
He writes about it every day.

Based on many manic posts, you should take the time to learn how to do a bit of basic research. Teach yourself to fish, in a figure of speech.
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deplorable 1
deplorable 1   |     |   Comment #190
I don't think you can add-on to a existing CD with a credit card although I did see that option on GTE's site but I think it was a glitch(during the add-on CD scandal) as that was probably for paying a bill. I need to call and ask about this as this could present a good opportunity. You can however fund a new CD with a cc up to $5,000 online. It is coded as a purchase on their end but you have to call your cc company to see if they change the coding on their end. Citi double cash and Alliant Credit Union Visa Signature card have been noted to code as a purchase. A good resource is here:
https://www.doctorofcredit.com/does-funding-a-bank-account-with-a-credit-card-count-as-a-purchase-or-cash-advance/
scroll down to GTE.
CDmanFL
CDmanFL   |     |   Comment #196
Thank you Deplorable! Very helpful info!
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Sam Kiggle
Sam Kiggle   |     |   Comment #204
Another indicator of just how poorly GTE is managed is that it allows CDs to be purchased using credit cards. GTE pays an extra ~2%+.

Why would any bank or credit union be willing to pay an interchange fee?
Lawyer time
Lawyer time   |     |   Comment #205
2 words if this happens at any institution: "Class action"
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Hiyeld
Hiyeld   |     |   Comment #232
Thanks Ken and all people who contacted them.
Also, thanks to GTE management flexibility to revert their own decision at least for now.

IMHO, as for a marketing genius, a Term Certified Deposit Account sounds much better than a Saving Account with early closing penalty
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