Can't Join a Credit Union? Blame Its Field of Membership
I've seen several comments over the years from readers who are confused over credit unions' connections with organizations that they serve. This can be confusing. Many credit unions have names that make them appear connected with some organization. Examples include Navy Federal Credit Union, Pentagon Federal Credit Union, American Airlines Credit Union and General Electric Credit Union. These credit unions were established to serve these organizations that are in their names, but they are not part of these organizations. They are separate entities.
Another important thing to understand about credit unions is that all are required to have a field of membership (FOM) which defines the groups of people who are eligible for membership. Many credit unions were established with FOMs that were primarily limited to employees of the organizations that they were named after. These are known as select employee group (SEG) based charters. FOMs have often been expanded to include multiple employee groups.
In addition to adding SEGs, many FOMs have expanded to include geographic areas. These are known as community charters, and they typically allow anyone who lives, works, worships or attends school in a specific area to join.
In addition to SEG and Community charters, FOMs can have a "common bond" that includes associations. This allows credit unions to include association memberships in their FOMs. As described in this NYT article, it has allowed some credit unions to open membership to anyone in the nation. I list many of these credit unions in my post, The Big List of Credit Unions Open to Anyone.
As credit unions expanded, many have changed their names so that they don't appear limited to just one organization.
Before credit unions can change their FOMs, they must get approval from their regulators. The NCUA is the primary regulator for federally chartered credit unions. Once a FOM is approved, the credit union is required to abide by it. So if a credit union says that you're not eligible to join, don't expect them to make exceptions. Credit unions can get into trouble with their regulators. One example of this occurred at the Air Force Federal Credit Union. The NCUA cited the credit union for improper membership. According to the NCUA's letter of understanding and agreement:
The Credit Union previously took an overly expansive view of their field of membership that was inconsistent with Section 5 of its charter. As a result, it has accepted share accounts, and extended loans to, individuals otherwise unqualified for membership, which has had a direct effect on the Credit Union's rapid growth and accounts for a significant percentage of its shares and its loan portfolio. These actions have led to our present supervisory concerns about operations and management.
One credit union that has angered some readers is Navy Federal Credit Union. It's the largest credit union in the nation, but it's FOM is primarily limited to active and retired military (see Navy Federal's eligibility checklist for full details). Disabled veterans, who are neither active nor retired from the military, have complained that Navy Federal has not let them join.
The interesting thing about Navy Federal is that its FOM used to include "Navy/Marine Corps receiving disability". This might have been removed when Navy Federal's FOM changed to include all military branches. I'm not sure why disabled veterans are no longer in Navy Federal's FOM. Nevertheless, Navy Federal employees have their hands tied. As I mentioned above, credit unions are required to follow their FOMs. Of course, Navy Federal could go through the process to expand its FOM to include disabled veterans. It seems like it would be a small expansion compared to how other credit union FOMs have expanded.
Navy Federal could have become another PenFed when it acquired USA Federal Credit Union which allowed anyone to join via an association. Before the acquisition, anyone could join USA Fed by joining an association. Many readers joined USA Fed before the acquisition, and they then became Navy Federal members after the acquisition completed. Unfortunately, Navy Federal decided to discontinue this common bond feature. So if you missed this backdoor way to join Navy Federal, you're out of luck.
One final feature that's important to know about credit unions is that once you're a member, you don't have to worry about maintaining your eligibility. As long as you maintain your credit union membership (keeping your share account), you can lose your job, move to another area or end your association membership without affecting your credit union membership.
The main thing I wish would change about Navy FCU (and also PenFed) is that they are NOT part of the shared-branch network of credit unions. Here in Northern California, I have ZERO access to both places, so I have to do everything via ACH transfers and online account management. There is one branch of Navy FCU in Monterey, but that is 120 miles away, and the branch is on a Navy installation which cannot be accessed by civilians (I am not active duty, but I was able to join Navy FCU because my father was retired military when I joined).
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Dear Readers,
For years Navy FCU has offered a certificate with 1 year term rate that often surpasses the rates available with certificates of 5 year term. It is called "Special EasyStartSM Certificate". There are restrications/conditions to obtain this rate, but if one is doing regular business with Navy FCU, then these conditions are not too hard to meet. In September 2012 Navy FCU had a promotion where they were offering 4% APY for 1 year certificate. Max amount in certificate per member was 4,000.
Often times Navy FCU offers 0% rate for balance transfer for 1 years to their credit card, and there is no "balance-transfer-fees". (They have one such offer presently that will expire by end of Feb 2013.) If one has a big enough credit-line, then surely it is worth to participate in this offer and get the cash for free for about 1 year!
The way I do this is to transfer the balance from PenFed's card to Navy's. And then from PenFed get a "cash-advance" from PenFed's credit card into PenFed's checking. PenFed has no cash-advance fees if one takes the advance from their credit card to their own checking. In effect, this gives "free" cash for usage for 1 year!
Yours Truly,
Anonymous
Good information (0% BT) on NFCU; there is actually one ongoing in January this year.
BR,
51
With Penfed years back I was able to get 6% CD's. I even got in on the famous 10 year CD at 5% a couple years back with a nice size CD that looks like a great move. I believe Penfed made a mistake but honored the rate.
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Dear #9, #10,
Indeed ... A Joke ... And those who participated are laughing all the way to the bank (nay credit union) to pocket few extra coins! :-)
Yours Truly,
Anonymous
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Dear Anonymous - #9,
My experience with Navy FCU is good. They are able to take the 'minimum' payment for credit card 'automatically' from the checking account on the due date ... YMMV.
One can shedule the periodic ACH transfers to replenish the checking account quite easily ... With the whole lot of free "Calendar" services where one can set reminders - for payments, transfers (and birthdays) these days forgetting something is getting rather hard! ... Again ... YMMV.
Yours Truly,
Anonymous
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Dear #14,
Sure ... I agree ... Some of you might expect more for your "trouble" .... But for some of us who do regular business with Navy FCU several times a month, this is no trouble at all ... It is merely a part of regular business ... So, some of us just do it ... and then laugh ... and then extra coins ...
Dear #16,
All right ... I can agree to it ... But I like the joke where Navy FCU is giving 4% rate of 1 year certificate better. than the joke where TIAA-CREF is giving 0% for their money market. ... One can laugh at the former, and frown at the later! :-)
Yours Truly,
Anonymous
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Dear #19,
Alas ... Looks like you still are not able to get the point ... I'll try one more time.
Yes ... 3k is a chump change (for me as well) ... However that particular 3k is not even the 3k that I've got! ... I mean that in effect that 3k is not owned by me to start with ... As I explained, it is the money I've borrowed at 0% using Navy FCU's credit card, that I'm turning around and using it to earn 3% ... So whatever interest I get (minus taxes) is truly a free lunch (at a place much better than the McDonalds of course!) .. Also since doing business with Navy FCU is something that is done in due course of the month, so it is no 'trouble' to do this once a year ... In short, for some this amounts to a few extra coins ... and for some the proverbial free lunch!
BTW, here is the "deal" Navy FCU has for the Balance Transfer. If one has an aircraft carrier size credit limit then one can borrow plenty at 0% and start earning few extra-coins/free-lunches!
https://www.navyfederal.org/membership-benefits/offers-discounts/balance-transfer-offer-2013.php
Yours Truly,
Anonymous
All I'm saying is that people around here have all their money getting 2% in some CD & call it investing in CDs. That is NOT investing.............because there is no possibilty of profit whatsoever.
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Dear #23,
Well ... if only you would have been careful enough to read thru the message dated "Wednesday, February 6, 2013 - 6:57 PM" ... Which is the very first one I posted in this thread has .. err the nugget ... about 0% BT offer, maybe the tedious would have been un-necessary. :-)
Yours Truly,
Anonymous
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Dear #25,
No no ... not all ...
Some here have portfolios in addition to traditional CDs ... Like Structured CDs, Structured Notes, Bonds (Treasuries, Muni, Corporate, Junk, Sovereign) , Stocks, ETFs/MFs, Metals, Commodities, Currencies ... etc. ... And some here do shorting as well ... (If it just that the focus here on CDs and other "deposit" accounts, as the site name suggests.)
Yours Truly,
Anonymous
#26........Obviously I'm wrong if that is true. But it sure doesn't sound that way with the way people lament about rates. In fact aren't there a number of people here who have publically stated they're completely out of stocks & other things & have all their money in CDs?
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Dear #27,
No? Okay ... How about connecting dots from one paragraph to the next and make an educated guess about whats' up? ... That won't be elementary ... would it be Dr Watson? ... But I concede ... Mere English Reading Comprehension perhaps is insufficient ... A little hint of logic will be needed as well. :-)
Yours Truly,
Anonymous
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Dear #28,
All right ... Then "technically" the underside of your mattress should be a place where you ought to "invest" in the hope of preserving your principal ... No?
Yours Truly,
Anonymous
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Dear #31,
Can't speak for others of course ... But being a trader I have held all of what I mentioned at some point or the other, and continue to from time to time. (And have quite a few of Structured CDs and Structured Notes. )
So what "investments" (technically correct or otherwise) do you use?
Yours Truly,
Anonymous
A little bit in stocks, 2 small paid for commercial properties in Nor Calif. Bay Area that thankfully have been rented out as restaurants pretty much the whole time I've owned them .............& a very hands on & rapidly expanding amount in Lending Club earning 15% per annum for the last 3 years. Yes, I do know that they're technically bonds. But anyway, that's it.
#33..........Yes, that's the default word for anyone that is capable of independent thought, isn't it?
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Dear #34,
Real estate in bay area has picked up nicely ... Job market has picked pace as well ... If the things stay the same then I guess you'll very easily surpass the CD rate by a very wide margin ...
Yours Truly,
Anonymous
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Dear #35,
You used the word "or" in your post of "February 8, 2013 - 8:43 PM" but changed it to "and" in post of "February 9, 2013 - 6:00 AM". You even capitalized the word and. Are you finding it difficult to write English in a consistent manner?
Now coming to the lack of logic in your writing my "friend": The "or" condition gets fulfiled if either of the two criterion joined by "or" is true. But an "and" condition gets fulfilled when both the criterion joined by "and" are true. ... Do you comprehend this? ... No?
So ... your technical definition dated "February 8, 2013" was fulfiled by a single criterion of the preservation of principal, hence the underside of your matterss was a perfect place for you to "invest" in. :-) ... So did you invest in there my friend?
Yours Truly,
Anonymous
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Dear #2, #14 ... #35
Are you having the "sour grapes syndrome"? .. :-)
Yours Truly,
Anonymous
Still.............I'm happy with how things are going. At the end of the day (after expenses) between the rents, & my Lending Club returns, I figured out some time ago that I would need to have 13 TIMES the assets I currently have parked in the best CDs to generate as much "monthly cash flow" as I do now. No exaggeration. Not bad for a "troll", wouldn't you say? :)
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Dear #41,
Great ... If your properties are in SOMA, then I might have visited those!
My real estate trading is limited to buying/selling REITs, especially GOV.
Yours Truly,
Anonymous
Like they say, location, location, location! :)
And do you really think NFCU verifies retired military status with the DoD? Surprise me.
I have had to document my eligibility for membership at 3 credit unions in the last couple of years. In at least 2 of those cases, I was questioned closely about how I met the criteria. The CSRs explained that comments from an internal audit about weak controls regarding membership eligibility had led to changes in procedure, so the requests for membership were being examined more closely. Fortunately I had my ducks in a row and was able to qualify at all three,because they had extraordinary CD rates which I was eager to lock in.