? Navy's Add-On 17Mo C.D. 2.25Apy $75K Cap

Cal_Gal | Jul 15, 2020 | 22 posts since 2018

Just called Navy to add on to this account I had opened as "insurance" in Feb. 2020. I was told the interest I had earned on it counted towards my max total. Always thought and believe was told when I opened it, that with add-ons, interest doesn't count towards the max. So now, it's 1 yay 1 nay so I'll call tomorrow and find out the tie breaker when my check clears, in the meantime....

What is your opinion? Thx

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Answers

Sylvia | Jul 15, 2020 | 389 posts since 2012

I've had many add-on's with Navy. The interest has never counted.

Language in the disclosure is, however, ambiguous, which may be why rep was confused: "If your Certificate/SaveFirst Account accepts deposits and its balance has not exceeded the maximum balance of the Certificate/Save First Account, additional deposits can be made by cash, check, Direct Deposit, allotment or periodic transfer(s) from a Navy Federal savings account, checking account, or Money Market Savings Account (MMSA)."

You do not need a rep's assistance or permission to add to CD. I push money into checking through an ACH, then transfer those funds to the CD through online banking. Just did that today, as a matter of fact. The transfer happens immediately. I suggest you do the same, Cal_Gal. It's a smart system. If the rep is correct, I'm pretty sure you'll know right away when you've exceeded allowable addition.

Cal_Gal | Jul 17, 2020 | 22 posts since 2018

Just got off the phone and here's what I did:
I gave her the amount to add that would equal the $75k cap. (Probably should have left off the .06 cents. lol) CSR said no, I'm getting $55.06 lower as the total that you can add (it was the amount that included interest). I said, please let's just try my amount first, so she did and she was surprised that it accepted it. So she made a note since it shows it's over the $75k cap and I will review my next statement to make sure it's earning interest. Glad it worked because I plan to max out my add-on IRA when one comes due later this year and will now have 2 separate CD's that show interest is not counted towards total. Don't know why this has been coming up but just wanted to make people aware. Stay safe everyone.....

Choice | Jul 15, 2020 | 937 posts since 2020

The most important question is...what happens if you go over (however calculated) cap? Personally I plan to have interest included...after all it is an add on

Cal_Gal | Jul 15, 2020 | 22 posts since 2018

Hi Choice, thanks for your response..I had rolled an account that had matured into this account, which has been earning dividends. When I wanted to add more money to max out the $70k, they are saying that interest earned counts towards money deposited. To answer your question: Under another account disclosures, it says if your account has not exceeded the max, addt'l deposits can be made.

RickZ | Jul 16, 2020 | 218 posts since 2010

I have three add-ons CDs with Navy (one regular CD and two IRA CDs) and this is what I've been told on more than one occasion. In fact, I recently maxed out one of my IRA CDs and this is the way that it was handled.

If you haven't yet reached the maximum for the CD then your current balance, which includes paid interest, is your starting point. For example, if you have a $75K maximum add-on CD and the current balance of your CD is $50K consisting of $48K principal and $2K paid interest then you can only add another $25K to the CD, not another $27K. I think part of the reason they do it this way is for simplicity - otherwise they'd have to calculate how much interest was paid and whether you removed any of the interest which is allowed by Navy.

After you hit your maximum, then future interest just gets added to the CD and the entire balance, even if above the maximum, earns the original stated interest rate. That's why for a Navy add-on CD it makes sense to reach the maximum as soon as you can.

Cal_Gal | Jul 16, 2020 | 22 posts since 2018

Thanks for your answer RickZ. I understand what you are saying, but actually, if only counting the amount deposited, it would be easier and no computation of interest would be involved. (Please see my most recent example below and my phone call results of today (7/16.) thanks.

Cal_Gal | Jul 16, 2020 | 22 posts since 2018

So I call today and even tho funds won't be available until tomorrow, I still went thru the same questions asking if the amount I could add (the amount not including any interest) would be the correct amount. The CSR said interest would count towards my total and the reason the last one went through (listed in my previous post) was because they had to do an override to allow it to be accepted. CSU said that by not counting any interest and if Navy doesn't catch and adjust it, the account runs the risk of it showing that it is over the amount and would not earn ANY interest. She didn't know if they were still "adjusting" and agreed with me about the disclosures and it has been brought up to include "interest earned shall be counted towards the total" but said "they" felt it would be too confusing. LOL So, I will post about the outcome hopefully tomorrow.

Ally6770 | Jul 15, 2020 | 4,295 posts since 2010

Read the disclosure. That is what will be used for what will happen.

Cal_Gal | Jul 15, 2020 | 22 posts since 2018

Thanks Ally6770, I read everything I have, but didn't seem to cover this specific item.

Cal_Gal | Jul 15, 2020 | 22 posts since 2018

Thanks to Choice who had responded below, got me looking at the add-on CD that just matured, it shows I opened with $50 in 1/2019, $8k on 11/2019 and $41,950 on 1/2020. So there was no interest calculated. I will call again and use this and post what the outcome is.

Choice | Jul 16, 2020 | 937 posts since 2020

Going in person may help... going eyeball to eyeball with manager AND reread disclosures and remember ANY ambiguity should be construed in your favor...if they have a “secret” meaning then tell them to put in next disclosures amendment but in the interim you are the one to provide the meaning...it is construed against the drafter! Them. ...And, silence in disclosures means no prohibition on what you want to do! And, if they accept deposits aren’t they saying, in effect, additional deposits are ok?

Cal_Gal | Jul 16, 2020 | 22 posts since 2018

I agree Choice, going in person is better and I wish I could, but being right near L.A., etc., I've decided I will not go inside anywhere unless emergency. IMO a lot of this is spreading is due to to how good their ventilation system is. Yes, I did bring up the disclosures during today's phone call (7/16). Please see my post below.

racecar | Aug 8, 2020 | 616 posts since 2014

Thanks for the information, good to know you asked for an override of this terrible policy. NavyFed is terrible credit union -- with their official policies (ie, terrible funds availability policy, can't ACH out of a savings account, etc), with the "non-official" way they do business (with stuff like your question about interest counting as the max), with the way CSRs (in the branch especially) give out false information (don't deal with the branches if you can help it, deal with the 800 #), with the many times they have blatantly lied and gone back on their printed (!) word to me (good thing I kept every printed piece of info I receive from them, in order to get them to honor their printed word -- otherwise they wouldn't). They are a place I'd never, ever normally bank with, but their CD rates, and the fact that you can add to current IRA CD rates every year, are the only thing that keep me there, and it's why I don't have any other products with them, like a checking account. But keep this in mind: (a) be prepared for "gotchas" and hoops in anything you do at Navy, (b) be prepared to be told the wrong answer multiple times, (c) keep EVERYTHING if you ever want them to keep their word. (d) If they cause you extra work due to their lies, misinformation, or incompetence, don't be afraid to ask them to compensate you. Recently I had a CD mature, and they screwed up for the umpteenth time (I won't go into the details, but their payment of the matured CD had to be rescinded and re-issued due to their incompentence). The agent, on her own, offered me some $$ to compensate for their incompentence and the amount of time it took me to clear up their incompetence. Next time this happens when it's their fault (and it will, be sure of it) I'll ask for compensation. The lesson of this is, that the "price" for Navy's good rates is having to deal with things that no other institution would do (ie, counting interest as principal when considering caps). Good for you that you fought it. Chances are, the computer won't flag it and you'll continue to get interest, but I'd still monitor it every couple months to make sure.

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