Signal Financial Credit Union

Inforay
  |     |   22 posts since 2010

I had opened a number of long term CDs with Signal Financial Credit Union which had an add on feature. After business on Friday, without any prior warning, we got emails saying that the add-on feature had been discontinued and that the credit union will no longer accept additions to the CD. This is shocking. To whom do we complain? I remember a similar situation had arisen with Valor Federal Credit Union and then after complaints they had allowed one more add-on.



Answers
alan1
  |     |   369 posts since 2015
Signal Financial is a federally chartered and federally insured institution (Charter Number 5571). https://mapping.ncua.gov/SingleResult.aspx?ID=5571

Complaints should be filed with the National Credit Union Administration. Information re the complaint process can be found at https://www.mycreditunion.gov/consumer-assistance-center

As to Valor: initially Valor offered a one-time opportunity to make one add-on deposit (subject to a maximum amount), only for those members who had filed complaints with the NCUA. However, the NCUA matter was ultimately resolved, by Valor mailing out notices to all owners giving them thirty days to make additional deposits without a maximum. It took several months for the NCUA matter to be concluded.

GTE recently tried the same thing as Signal. GTE rescinded its termination of the add-on clause after a few days.

By all means, file a complaint with the NCUA. Based on the statements in your posting, my _guess_ is that if Signal does not reinstate the add-on provision on its own, the NCUA will get them to send out thirty-day letters, giving you an opportunity to make additional deposits.
Kaight
  |     |   368 posts since 2011
alan1 is correct overall. In particular he is correct regarding Valor, where I, too, was a participant in the process.

In addition to Valor, which took place more recently, back in 2007 or 2008 USCU went through a process similar to the one described by alan1. There were complaints to the NCUA. Ultimately USCU was forced to open a 30 day window, a notice window if you will, during which account holders were, once again, allowed to increase balances in their add-on CD accounts.

Signal Financial clearly is unaware of the rules. Their account holders need to file complaints with the NCUA. Then you wait, and it might be rather a long wait. But remain alert and ready.  Eventually the 30 day window will open. The bad news is that, following closure of that 30 day window, your add-on privilege will be permanently gone. And, yes, Signal Financial can do that to you . . . . . but only after providing you 30 days of notice.

A final comment on detail:

The 30 day notice period is NOT 30 business days. It is 30 calendar days. Weekends and holidays count. So if Signal Financial follows the timing scheme adopted by Valor, you might end up with many fewer than 30 business days to accomplish your add-ons. Valor was pretty sneaky the way they did it, making matters as difficult as they could for us to add funds which, of course, they did not want at all.
CDmanFL
  |     |   23 posts since 2019
Kaight,
Time for me to eat crow. I was wrong. So, next question. Can banks and CUs terminate existing CDs? I have CDs without add-on provisions in the 4% range. Can they just wake up one day and say it’s time to terminate them because they made a bad deal? Do you know if any bank or CU has actually done this? I would imagine it would significantly mar their reputation as they would hear it from all sides. I would also imagine they would subject themselves to costly litigation even if the small print was in their favor. I, for one, would sue them in small claims court. Look forward to your thoughts.
Kaight
  |     |   368 posts since 2011
Relax. No need for the crow.

As for your question, I'm unable to answer. My knowledge of the 30 day rule with add-ons came only based on my own actual experiences. I have no experience with any financial institution ever having lowered the interest rate on a CD or terminating a CD as you describe.

I can address the issue in theoretical terms, but remember actual experience counts for a lot more. It is my best understanding that for any credit union no promise they make to a depositor is a suicide pact. I have seen these terms from time to time, published in individual credit union disclosures. Usually it states something like "credit union is not required to pay interest in excess of earnings" . . . or something like that. I do not have the exact words. But the gist is that if the credit union is unable to pay the agreed-upon rate of interest without going belly up, then they are released from the obligation of doing so.

But again, I have never actually encountered this myself personally. If other posters here have, then their input is worth more than mine.  When something actually happens to you personally, with money on the line, that is more illuminating and memorable than merely a lot of talk.
CDmanFL
  |     |   23 posts since 2019
Thank you Kaight. All my credit unions are rated at least a “C” on Weiss, which I’m interpreting to mean they are “ok” and relatively stable and not on the verge of going belly up. I’m a small potatoes investor and just trying to eke out a living. Hoping my banks and CUs honor their end of the deal. Thanks
me1004
  |     |   913 posts since 2010
CDmanFL, I'm no lawyer and there can always be details that make a difference. That said, I would not think they generally can change the interest rate you contracted for – unless the terms of the CD contract provide for that. When you open a CD, you and the financial institution are entering a contract.

Of course, some CDs are callable CDs -- watch for that in the fine print, too often that is not obvious. Those can be closed by the bank before the CD term ends, which are the terms of the contract entered. I have seen others that give variable interest rates, often pegged to a certain index. Again, that will be in the terms of the CD contract. Of course, there also are "bump up" CDs, which obviously provide for changing the interest rate, although typically only upward.

In the end, the answer to your question is it depends on the CD contract you entered, and you better read the fine print in the disclosures of the CD and the overall disclosures of the financial institution – they two need to be read together – before opening the CD. But most CD contracts do not provide for the interest rate to change.
CDmanFL
  |     |   23 posts since 2019
Appreciate the feedback. Thank you
Inforay
  |     |   22 posts since 2010
I have not experienced a credit union or bank lowering rates on existing CDs. However, I had a Roth IRA with U.S. Bank some years ago with a relatively high interest rate. There were no fees for the first two years, because the Roth IRA was a CD. Then they suddenly sent a letter that they would be charging a substantial fee (I think between $20 to $40) for maintaining the account. Effectively, that would have completely wiped out the interest and actually eaten into my principal. I asked to close out the CD and US Bank refused to do so, without penalty. After much wrangling and numerous letters they allowed me to close out the Roth IRA CD without penalty, and I had to put the money elsewhere at a much lower rate. It was a terrible experience and I have never trusted U.S. Bank again.
Choice
  |     |   41 posts since 2020
Also, look at your credit reports...even with a freeze and no loans, cards, etc. USBank will pull a report and use the standard “account maintenance.” Finally they continue to brag about being the recipient of ethical —— award...they wrote a check for penalties in 100s million of dollars to resolve those so-called allegations during the same timeframe. Go figure!
P_D
  |     |   4 posts since 2020
I'm going to take the high road and not even mention that I've repeatedly described this risk scenario for months and was roundly dismissed. Not even going to bring that point up, lest it appear an immodest gloat.
alan1
  |     |   369 posts since 2015
My recollection is that a number of people have repeatedly described risks associated with changes in terms of CD agreements, particularly with respect to termination of add-on provisions, for several years, not merely months.

I fail to see the value of the above post.
P_D
  |     |   4 posts since 2020
Yes, I can see why you would object to it.
Robb
  |     |   60 posts since 2018
I spoke to a Signal Financial rep and can confirm that they are no longer honoring the add-on feature. I expressed my concerns which they stated would be forwarded to management. I've been involved in a number of add-on CD's over the years but this is the very first time that an institution materially changed the terms of the add-on feature. In addition, I personally have not received any form of notification of this abrupt change thus I called in after reading this post. I am also considering filing a complaint with the NCUA on this issue.
Sherlock
  |     |   5 posts since 2020
I also contacted Signal and expressed my annoyance. I told the representative that I believe the NCUA requires the 30 day notice of this change while still allowing members to add on. I also filed a complaint with NCUA with the link given by alan1 requesting NCUA to enforce their 30 day rule. I encourage everyone with add on cds at Signal to file a complaint, Thanks to everyone for their feedback about Signal
Question: If Signal Financial Credit Union with a B + rating and only 441 million in assets feels the need to cut off their add on terms for their financial health does that make Signal credit union mnotva stable credit union to have your mone?
Choice
  |     |   41 posts since 2020
NCUA should take it over and sell the assets...changing of the terms should send notice to NCUA that its oversight has failed and/or CU management/Board of Directors ditto!
alan1
  |     |   369 posts since 2015
and if the NCUA sold the assets, as recommended by Choice, what would happen to the credit union's liabilities, including the existing add-on certificates? Signal is trying to terminate the add-on clause. Choice's choice would result in termination of the certificates. Brilliant recommendation.
Choice
  |     |   41 posts since 2020
Package deal...including accounts would be a fit for a well managed CU. NCUA will provide the requisite guarantees to buyer.
CDmanFL
  |     |   23 posts since 2019
Please file a complaint. I will also. Let’s all do it for the sake of our brotherhood.
JWARREN
  |     |   21 posts since 2017
Geez, here I go again. I too was caught up in the GTE fiasco. I believe that the rapid rethinking by GTE may have had a lot to do with a deluge of complaints emailed directly to their "executive committee." I noted that given their boasts of many years working in the financial services industry, they knew, or should have known, that offering unlimited deposits to add-on CDs in a falling interest rate environment could adversely affect CU operations. But I suppose that now institutions will rely on the notion that covid-19 is a "black swan" event as an excuse?
JWARREN
  |     |   21 posts since 2017
"The Supervisory Committee acts as liaison between the membership and management of the credit union. If you have questions or concerns about your account, please email or call our Member Services Department. To correspond directly with the Supervisory Committee, write to:

Signal Financial Federal Credit Union
Supervisory Committee
P.O. Box 344
Kensington, MD 20895
[email protected] "
Robb
  |     |   60 posts since 2018
Ok quick update...spoke to Keona at member services this morning and she stated that we would be allowed to add to our CD's for a 30 day period. I would personally call in yourselves to verify this before trying to add onto your CD's given how "fluid" this situation has been. Seems like all the push back by members has helped.  Also told there is a 5k limit per day per their ACH me2me system. And also that they would be sending out an updated email/disclosure at some point regarding the 30 day window. I plan to add funds this week and will provide an update as to how that transaction goes.
Choice
  |     |   41 posts since 2020
And, being the first Monday of the month, navy federal continues their add-on’s...some CUs plan well and others should have been learning from the leaders. The NCUA should be proactive!

Ken, why not try to interview the Chair of the Board? “Your” readers would appreciate it! And that includes other CUs. Want some suggested questions especially from those that were close to DotCom and the GreatR debacles?
Sherlock
  |     |   5 posts since 2020
Robb thanks for this helpful information. I called after reading your posting and was also told add on for the cds are still available for 30 days. I am heartened that push back from members influenced Signal’s policy. Although I am left with a negative opinion of their financial analysis and practices, in addition to credit unions in general ability to change terms of existing savings products
Robb
  |     |   60 posts since 2018
Sure thing Sherlock...made a transfer in today...asked for a specific cut off date but have not been able to get one other than we have a 30 day window to add to our CD's. Good luck!

Meanwhile the Fed cut another 50 basis points....
Choice
  |     |   41 posts since 2020
“You all” are very trusting! They give you the “shaft” and you put more $s in! WOW, what a great vote of confidence for management...they got your $s now not later! If, ie when, they do something again, whose fault then? Vote with your feet and take the $s without any penalty and run, not walk to another FI. There are safer harbors out there
blazer9
  |     |   43 posts since 2019
so where is this mystical FI that offers 3+% for a 24 m CD??
for 24 m i'd say dump what you can into this deal while they
give you the time. My best 24m is only 2.70 with no adding to it.
not counting older offers.

wait i know the stock market
Choice
  |     |   41 posts since 2020
0.3% is the difference...that is what is in play. And that is worth the stated risk? If so, go for it! Return of principal is the key in questionable times not return on principal
Sherlock
  |     |   5 posts since 2020
Addressing the legality of the credit union changing the terms in the account agreement Ken Tumin wrote back in 2012 in reference to CEFCU changing the existing certificates early withdrawal penalties:
“I asked my NCUA contact about this and he sent an Office Staff Interpretation of a NCUA regulation which stated: Credit unions are cautioned that unless credit unions have reserved the right to change terms in the account agreement or disclosures, a change in terms notice may not be sufficient to amend terms under applicable law”. Ken then wrote a generic clause allowing the institution to make changes is probably common in member agreements or disclosures

Regarding my specific add on cd agreement there is no reserved right to change terms. However, I don’t have any paperwork from becoming a Member
Does any Signal member have paperwork and can you check your membership agreement for the reserve the right to change terms clause

I feel in these incidents, the power is one sided toward the credit unions and banks
Although I was told the FDIC has stricter rules than the NCUA......but then there was Wells Fargo, so who knows
JWARREN
  |     |   21 posts since 2017
To begin, I haven’t received any notification of a change in the terms associated with my Signal CD account. And, I haven't come across a provision that states the CU can change certificate terms for any cause. Further, the following seems pretty unambiguous:

"ACCOUNT DISCLOSURES
7. Transactions Limitations - For all accounts, your ability to make deposits to your account and any limitations on such transactions are stated in the Rate Schedule. Additional deposits are not allowed for IRA Share Certificates and Coverdell ESA Certificates. For other share certificates, you may make unlimited additional deposits to the account during the term. After your account is opened, you are allowed the option to conduct one withdrawal up to 50% of the balance without penalty ('option"). ..."

https://www.signalfinancialfcu.org/wp/wp-content/uploads/2019/02/Membership-Disclosure-Packet-2019_Feb.pdf

A bait and switch?
marcal
  |     |   34 posts since 2011
I sent a secure message today to request transfer to my 72 month CD. Was very quickly done. Received a share certificate maintenance form as a receipt with an updated balance.
Sherlock
  |     |   5 posts since 2020
I sent an email to Signal on Saturday pointing out their requirements to give 30 day notice of the change to discontinue the add on feature of existing certificates while allowing members to continue to add on for those 30 days. I got an email back from Signal:
We apologize for any inconvenience; all members will be sent a letter with the final date additional funds feature will be discontinued on existing share certificates. As of 3/2/20 all existing share certificates remain with the service of “add-on” funds

I checked online for Signal’s Membership Agreement and Disclosures. On page 8 is Notices part b. Notice of Amendments. Except as prohibited by applicable law, we may change the terms of this agreement at any time. We will notify you of any change in terms, rates or fees as required by law. We reserve the right to waive any terms of this Agreement......

I forwarded this to a lawyer friend of mine and waiting to hear a legal opinion but my guess is this is the “reserve the right to change terms” which legally covers Signal for the add on change.
Maybe they’ll hold off sending that notification letter and we’ll have more time to add funds
marcal
  |     |   34 posts since 2011
I just called member services at Signal Financial and was told that that the change would be to new certificates only. Existing certificates could still be added to. Hope this stays true.
Robb
  |     |   60 posts since 2018
Another update...received an email this afternoon with an Add-on cut off date of the following:

"Effective 04/10/2020, additional deposits will not be allowed during the term."
Mr_DYI
  |     |   7 posts since 2016
I just looked at Ken's page on Signal, and these comments are not posted or linked on that page. I would encourage you and others who have had this bad experience to post a review there too, so others when they look into putting funds at Signal will be forewarned. I just posted my review there on this issue.
Inforay
  |     |   22 posts since 2010
I received an email yesterday that April 10, 2020 would be the last date to add funds to existing add-on CDs. Could others who have received similar messages, please let me know?
Robb
  |     |   60 posts since 2018
Yes see my post above which mirrors yours. Thanks for your original post/thread here.
Inforay
  |     |   22 posts since 2010
Thank you, Robb. I also received a letter in the mail yesterday.
JWARREN
  |     |   21 posts since 2017
Yes, I got the “official” email notification on Monday, 3/10.
Mr_DYI
  |     |   7 posts since 2016
Thanks for your original post on this too. I received my email yesterday with the 4/10 effective date. It seems the CU can have the Add-on feature when it benefits them, but can close it when it benefits the customer and not them. I hope we don't see more of this with other CUs. This will likely be the last time I place any funds in Signal. It's a matter of trust. Sure would be nice if we could move our money out of CDs with low rates to other banks with higher rates without penalty. But we can not. Conversely, they should not be able to close an add on feature either, when the rates lower.


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