Crunch Time At GTE

blazer9
  |     |   139 posts since 2019

removed misinformation posted



Answers
Kaight
  |     |   474 posts since 2011
Since the topic of GTE has been opened, I have a couple of observations and comments. GTE is important to many of us because we have generous add-on CDs there with decent time horizons. We want GTE to survive and prosper so we going forward can continue to add on to our accounts as other CDs mature.

I am seeing the current porkulous legislation as positive for those of us at GTE. I don't deny the porkulous is controversial, but it appears a sure thing at this point and obviously Biden will sign the legislation. It has the impact of spreading money around nearly everywhere. Sure, I realize it's all borrowed. But regardless, so much new money in the system will be sustaining for outfits like GTE which might otherwise be teetering on the edge of viability owing to the pandemic and to the current very low interest rates. For those of us with add-on accounts at GTE, this is a good thing. We do NOT want GTE to fail. We do NOT want the return of funds we currently have on deposit at GTE.

Sure, I'm well aware of the threat of inflation and all that . . all the negative stuff. But for us GTE members with add-ons the overarching consideration is simply having GTE remain above water so we can continue to cash in with those great add-on CD accounts. So I'm seeing the porkulous, generally speaking, as a positive event for us.

What the heck, if the Tampa region is good enough for Tom and Gisele, and given Tampa is the City of Champions in hockey, football, and baseball, I think we have a good chance of GTE making it!!

My fingers are crossed.  I'm rooting big time for GTE's survival.
Choice
  |     |   374 posts since 2020
Dream on! The logic on viability is….
blazer9
  |     |   139 posts since 2019
Read some Banks and Credit Unions may not consider Joint owner addition to an account to increase insurance because they are not a member. NCUA insurance estimator validates that.
Thankfully PSECU and GTE do not apply that condition.
I have 3 CDs at GTE which I had thought would cover all additional funds to them.
Title of those accounts determines insurance coverage, and I spread myself on them to thin.
I'm working on that because all have been Me as primary owner and that reduces the total amount
of insurance i can apply in my name. Having a small family left puts a damper PODs and Joint owners. Thankfully I'll be able to dribble funds in at PSECU.
I got hemmed in with a Andrews 84 month $1000 CD for the same mistake.
Right now I'm being overwhelmed with maturities . 
Yu
  |     |   14 posts since 2019
Do you know if GTE allows me to add a joint owner or beneficiary onto the Add-ons and still keep the rate and add-on features unchanged?
blazer9
  |     |   139 posts since 2019
I'm a pick and poke typist so here is a cut and paste from bank search of GTE

GTE Financial - Ability To Add Beneficiaries Online
Posted by: Hooked | Jun 19, 2020

New feature at GTE allows you to add beneficiaries online. There is an ‘Everything Else’ button towards the right, just before the log off button. Under ‘Resources’, choose ‘Forms’ and you will see the Beneficiary form as the first option. Complete and submit. SSN and DOB of beneficiaries required.

I give them four stars for this enhancement.
Striker
  |     |   17 posts since 2017
I have the 60 month add on CD at GTE at 3.30APY. To take advantage of that rate, I added funds from other maturing CDs, and added my wife as a Joint owner to the account to increase FDIC coverage. Same account - same rate. It was simple. No issues. No problems. Since she is now no longer the beneficiary - just for covering all bases in case something should strike both of us down - I added my two adult children as co beneficiaries. Again, simple, no problems, no issues.
Yu
  |     |   14 posts since 2019
Thanks Striker. When you add your wife as a joint owner, do they do a hard pull check to your wife's credit report?
Striker
  |     |   17 posts since 2017
Yu - I have no idea whether they did a hard pull or not. To me - 3.30% locked in until late 2024 versus 1% I could have gotten elsewhere for maturing funds - a credit pull was a non-factor for us.
JWARREN
  |     |   33 posts since 2017
Just because I’m paranoid doesn’t mean that they’re not out to get me! On July 1, 2021 updates to GTE Financial’s Account Disclosure and Schedule of Current Charges will go into effect. You may view the new Account Disclosure at
gtefinancial.org/accountdisclosure
and the new Schedule of Current Charges at
gtefinancial.org/feeschedule
I wonder if there’s an “inactive/dormant account” gotcha in there for add-on CD holders?
I also wonder about this requirement concerning informal trust (POD) accounts: "The account title or other account records of the credit union must indicate the account is held pursuant to a trust relationship." GTE allowed me to increase the number of my beneficiaries but do I also need to change the account name?
Coreyfr
  |     |   3 posts since 2020
Regarding the trust language, I have a joint account with 2 beneficiaries to get to 1 million of NCUA insurance. Do I need to be concerned about the title of the account?
JWARREN
  |     |   33 posts since 2017
Perhaps the GTE form with the title below

"Beneficiary Designation For Payable on Death Account
(Excludes IRA Accounts)"

is good enough to satisfy the "... or other account records of the credit union must indicate the account is held pursuant to a trust relationship..." clause.

But, I'm not an attorney and I don't play one on TV. But it appears that a single owner (grantor) that designates five (5) beneficiaries for a POD account would have $1.25 million in insurance coverage?
Coreyfr
  |     |   3 posts since 2020
And a joint account with 2 beneficiaries should have $1 million.
Yu
  |     |   14 posts since 2019
Coreyfr, Can I know when you add a joint owner, did they do hard pull for credit check or apply for the joint owner membership automatically?
Coreyfr
  |     |   3 posts since 2020
Wife had to join to get insurance per NCUA and yes hard pull
JWARREN
  |     |   33 posts since 2017
How is this supposed to work for add-on CD accounts opened 18 months ago since this updated agreement isn't effective until July 1, 2021?
RIGHT TO REJECT: You may reject this Arbitration Agreement by mailing a
signed written letter of rejection to GTE Financial, Attention Office of the
General Counsel, 711 E. Henderson Avenue Tampa FL 33026 within sixty
(60) days after the date of your first deposit. Any letter of rejection must
include your name, address, telephone number and Account number,
senda
  |     |   30 posts since 2015
RE: GTE
(1) Where did you guys find out that GTE is updating their Truth In Savings in July? When other FIs do it, I usually receive an email notice from them, but did not receive anything from GTE.
(2) Did anyone keep the Truth In Savings Disclosure from back with the Add-Ons were being offered a few years back? Did they have arbitration clauses back then, or are they brand new now for July 2021?
(3) As for JWARREN's comment/question above, yes the GTE language literally makes it impossible for someone to object, but what you can do is this: Once July 1st passes, you can ACH a tiny deposit (5c or something like that) to your GTE savings account and then immediately send them your written objection, and point out in the letter that you're sending it within 60 Days of your first deposit "since the terms have been changed allowing this option". They may try to fight it, but if you ever had something that had to go to court, I doubt any sane judge would reject it -- under the condition that the ORIGINAL terms didn't have an arbitration clause in it as well (can anyone who might have kept the original PDF or documents check on that?)
(4) The new fee schedule... I DID keep the original fee schedule and didn't carefully compare it to the new one, but at just with a quick glance, it's just a fee-happy as the original.
(5) Personally, I have set up automated ACH tiny deposits to occur at regular intervals every few months, and I send them to all the FIs I belong to do avoid such fees. The total for ALL the FIs I belong to is under 50c a year -- money I can always get back anytime I want.
(6) In 2024 there will be a LOT of discussion here about whether to stay with GTE when this deal is done. Normally I try not to leave CUs anymore (I did leave a couple when their deals were done, but nowadays I try to stay with them and just ACH a couple pennies a year to keep them active). But GTE has a minimum balance requirement as well, and they are absolutely fee-happy. It's the kind of institution that I'd NEVER have joined had they not had this kind of Add-On CD. Will have to decide what to do when the time comes.
(7) Haven't checked (I suppose I could but I guess I'm just being lazy)... does anyone know, does GTE still offer Add-On CD products (of course if they do the rate would be terrible now, but I'm curious if they still offer the product or if they stopped altogether). If they still offer Add-Ons that might make me want to stay with them after 2024 and keep the $500 min balance req just in case rates tick up. Add-Ons have become super rare (even before the pandemic) and the other places where I've had Add-Ons no longer offer them.
JWARREN
  |     |   33 posts since 2017
There is a note on page 1 of my March 2021 GTE eStatement about the pending updates of the “Account Disclosure” and “Schedule of Charges.”
alan1
  |     |   588 posts since 2015
senda asks: "does anyone know, does GTE still offer Add-On CD products"

GTE is not offering add-on CDs.

"You may not add any additional money to your certificate after opening."
https://www.gtefinancial.org/personal/spend-save/savings/share-certificates
senda
  |     |   30 posts since 2015
PS RE: GTE
(1) I DID save the original "Account Disclosure-Member" (Truth in Savings DIsclosure) document from when I opened the CD (not as a PDF, but I printed it out). THERE IS NO ARBITRATION CLAUSE I CAN FIND IN IT.
(2) BENEFICIARIES: If you didn't know, when you go to the GTE Website, if you click on the ACCOUNT # of your CD (NOT the "60Mo Promo Add-On" description, but the actual ACCOUNT # to the left of the description) it will pull up a slightly different-looking page than if you just click on the "60MoPromoAddOn" description. And on that page (again, by clicking your ACCOUNT#) it will clearly show you a list of all the beneficiaries you have on the account (it'll show PRIMARY OWNERS, BENEFICIARIES, DIVIDEND RATE, MATURITY DATE, etc).
111
  |     |   196 posts since 2019
To add to what senda said, I also searched the following PDF files from GTE that I downloaded when I opened my member account and add-on CDs. These files were: “Account Disclosure - Member” , “Share / IRA Certificate Disclosure”, “Member Schedule of Current Charges”, all my monthly statements, even the e-statement consent disclosure and the screenshots of me opening the CDs and later adding-on to them. I found nothing regarding any arbitration clause, or anything that “seemed” like it might be an arbitration clause but did not use that name.
Choice
  |     |   374 posts since 2020
No consideration…ergo no effective mod/arbitration to contract! They have to wait!
JWARREN
  |     |   33 posts since 2017
Well, this is ominous.

IMPORTANT LEGAL NOTICE
These Terms and Conditions contain an Arbitration Provision. Unless you reject the Arbitration Provision, it will govern your Account. …

The GTE Financial Board of Directors may change the dividend rate on any GTE Financial account at any time. Dividends are based on the credit union’s available earnings after required transfers to reserves at the end of a dividend period. …

Continued use of your account indicates your receipt of and agreement to these terms and conditions disclosed in this Account Agreement and Disclosure. …

Of course, I hope that my paranoia is just getting the best of me.
111
  |     |   196 posts since 2019
jwarren - Your second paragraph - “The GTE Financial Board of Directors may change the dividend rate on any GTE Financial account at any time. Dividends are based on the credit union’s available earnings after required transfers to reserves at the end of a dividend period. …” for the most part appeared in GTE's disclosure forms in effect in April 2019 (document created Sept. 2018), and in March 2020 (document created March 2020). The only difference is that those earlier disclosures said “The GTE Financial Board of Directors may change the dividend rate on any GTE Financial account during any or each of its monthly meetings.” But now, after 7/1/21 they can possibly change (meaning lower, of course) rates at any time, without waiting for a monthly Board meeting. Nice!

Your third paragraph - “Continued use of your account indicates your receipt of and agreement to these terms and conditions disclosed in this Account Agreement and Disclosure. …” also appeared in those two earlier disclosures, verbatim.

Having said that - no, you are not being paranoid. Even though those two clauses I cited haven't really changed much versus the earlier disclosure forms, the arbitration clause itself is the important change. Many of us recall the account change GTE made on 10/2/19 to severely reduce the usefulness of the add-on CDs, then backed off that change a day later. Of course, they had no arbitration clause in place back then...
Kaight
  |     |   474 posts since 2011
No dispute or challenge regarding anything you wrote. And what you wrote is helpful to know. However:

The GTE Board still cannot act to terminate our add-on privilege without first offering members thirty days' notice of that privilege recission.
111
  |     |   196 posts since 2019
Kaight - You said “The GTE Board still cannot act to terminate our add-on privilege without first offering members thirty days' notice of that privilege rescission.”
I wish I were as certain as you that this is true. Actually, what I really wish is that we never have to find out whether you are correct or not - because that will mean that GTE will not have attempted to abrogate the add-on provisions they agreed to in writing in 2019.
One reason I'm not as certain regarding the 30-day notice is that when GTE notified us back in October 2019 that they were severely curtailing the add-on provisions they'd agreed to, there was absolutely no mention of any 30-day notice. In my case their email was sent on 10/2/19 (that's SENT on that date - not the date I first looked at it, which coincidentally happened to be the same date). I suspect the timeframe for others is not too dissimilar.
The first line of my email reads “GTE Financial has updated the terms of its Add-On Certificates effective 9/29/2019.” This was my first notice of any changes. Not only is that not a 30-day notice, it's in fact a negative-3-day notice. (Just to be thorough, I even checked my old GTE monthly statements from April 2019 through November 2019, and my emails from GTE for several months before 10/2/19 - and no, GTE did not try to notify me of this change via a message or notation on any of the statements, or a prior email.)
We all know now that GTE backed off this change - I received this email notice 1 day later. As with the initial email, the “back-off” email also included absolutely no mention by GTE that they felt they were subject to any “30-day notice” provision.
So … why did they back it off? WAS it because they were informed that they were in fact subject to a 30-day notice, and they'd clearly not given it? Was it for other reasons? Was it because, in part, they had not (YET!, as we now know) subjected their members to an arbitration clause? Was it for all of these reasons?
Enquiring minds want to know!
Kaight
  |     |   474 posts since 2011
It's straightforward actually. GTE back then violated NCUA regulations. It's not the first time this has happened where recission of CD add-on privilege is involved. USCU, in North Carolina, violated the regulation back circa 2007 and was forced, eventually, to offer proper notice. And more recently Valor did the same thing about seven years later. Valor was, similarly, forced by the NCUA to reinstate the privilege and then offer proper notice.

Of course, both in the case of USCU and Valor, the CD add-on privilege was ultimately rescinded. However, not before the required thirty day notice period was enforced.

It's guesswork at GTE. My guess is, because of their earlier faux pas, the GTE potentates are now aware of the NCUA requirement to offer members thirty days of notice. But at the bottom line, as ultimately was the case at USCU and at Valor, the GTE Board can take away our add-on privilege if they obey the NCUA rules.

Finally I would observe adherence to the thirty day rule is not severely burdensome for the financial institution. Sure, once notice is provided members will move heaven and earth to pack as much money as they are able into their GTE CDs. Problem for us is, you need money to do that. And the needed money might only be available after payment of a hefty early withdrawal penalty (EWP) elsewhere. I can offer the following counsel, something I have done:

Become aware of any of your financial institutions which might be waiving their CD EWPs on account of the pandemic. Of course I did that over a year ago. It helped me to lay my hands on funds which I needed back then to reinvest, but which were tied up. Today, with the pandemic waning, this approach might no longer be viable. I dunno. But GTE cannot harm you with add-on privilege recission if your money has already been added-on.
senda
  |     |   30 posts since 2015
(1) Most FIs have stopped waiving their CD EWPs temporarily put in place for the pandemic. Even when NavyFed still had a 3% going (before it matured a few months back) just out of curiosity I called to see if they were still waiving their EWPs (even when it'd be in THEIR benefit to do so with a 3% CD) and was told no, the fee is back in place. Of course each FI is different, but don't expect much.
(2) As much as I'd hate to see the Add-On disappear, what would be even worse would be if GTE simply decided to change the interest rate of the CD itself to, heck 0% if they want. Even Valor didn't do that. If they try to pull that one, the institution's going to find itself severely underfunded in a very short time.
CDmanFL
  |     |   35 posts since 2019
Good evening friends, I remain hopeful that GTE will continue to honor their CD obligations, including the add-on provision. Aren’t they sufficiently profitable even despite these CDs? If so, it’s just crimping their profitability. It’s not like they are in dire straits over this. Their health ratings are very good here and from Bauer. And just think of the goodwill they will generate by honoring these CDs. They’ve already let these CDs ride for a long time and they don’t appear any worse for wear. Call me Pollyannaish but I’m feeling good about this.
Choice
  |     |   374 posts since 2020
And, if they do/think that it can be unilaterally changed, overwhelming it with arbitration claims (it is usually required to pay up front filing fees…ask your attorney) could trigger the same result as Amazon recently realized
JWARREN
  |     |   33 posts since 2017
Interesting. So, is opting-out of arbitration a good thing to do?
Choice
  |     |   374 posts since 2020
Preserve your rights and object to them having any authority and if they did you opt out…is that what you’re saying?
111
  |     |   196 posts since 2019
@Kaight - You say above that GTE's motives were “straightforward”. Well perhaps, but my response to that is there was a simple way that GTE could have been unquestionably “straightforward” - they could have, in their “back off the rescission” emails sent 10/3/19, said “sorry - we messed up and did not follow NCUA regulations” (perhaps in more flowery language). They did not - instead, their email said only “...please disregard our earlier email...”. They FULLY INTENDED it to be a customer ambush - as I said earlier, I received a “negative 3 days” notice. I guess from GTE's point of view, there is such a thing as “too much honesty”. (LOL)

@All - Regarding methods to add-on funds to your GTE CDs before 7/1/21 (or before 7/1/21 plus 30 days) - one mentioned above was to “look for any of your FIs which might [still] be waiving their CD EWPs on account of the pandemic”. Another method might be, find out which of your FIs will agree to removing ONLY your accrued interest (no principal) from some or all of your CDs - without triggering an EWP - and add-on this money to your GTE CDs. Many FIs will do this.

Yet another method would be to take a look at any Rewards Checking accounts you may have. Certainly for any that have dropped below 2%, and perhaps even for those in the 2 - 3% range, consider cashing them out and using those funds to add-on to your GTE CDs. This of course reduces the liquidity of those funds, but in the case of a family emergency requiring ready funds, the EWP on the GTE add-on CDs isn't too egregious. Mine is 180 days, and I assume all or most others bought during that GTE promotional period are the same. (But I suppose the wunderkinds at GTE in their infinite wisdom could alter that as well after 7/1/21 - so in a sense everything is up in the air.)
CDmanFL
  |     |   35 posts since 2019
Just looked at the most recent Call Report on the NCUA website. I’m not a financial analyst but it looks like they had net income of $5 million in the first quarter of 2021. Annualizing that is $20 million for the year. Seems like a super profitable institution. Or am I missing something?
Kaight
  |     |   474 posts since 2011
Thanks CDmanFL, for your post. That is good news indeed!

I lack the business acumen to respond to the second portion of your post. I mean, while the fat profit is great there could also be negative stuff in that report which I do not have the knowledge to recognize, understand, or evaluate. I wish I did have that ability.

I will be waiting for the three ratings services, later this month, to perform the overall evaluation I'm unable to do personally. Ken is usually first with this data, followed by Bauer, and then later followed eventually by Weiss Research. I hope Weiss gets around to releasing their Q1 2021 credit union ratings before Fourth of July. They are perennially tardy.

Bank ratings seem to emerge first each quarter for reasons of which I'm unaware. All my money is in credit unions, like GTE for example, so I don't care about the banks. Regardless, we credit union folks always have to wait.
senda
  |     |   30 posts since 2015
Unfortunately, a FI doesn't have to be in dire straits to break its word and do what it wants. If there's a good chance it'll go under otherwise, the NCUA would be more inclined to let it do what it must to survive regardless of the members (as seen before), but if merely makes things a little painful for a few years (or even if it doesn't), the same language can be used to go back on their word at any time, even in times of profitability. Of course that would forever stain the reputation of the institution. Also, if I remember right, NCUA and FDIC don't have the power to do enforcement actions for individuals. They can tell a credit union that they need to stop doing X or start doing Y, but if the CU wants to ignore it, from what I remember, the NCUA (&FDIC) can't force them to on your behalf. You'd have to sue (or go into arbitration, thus all the new arbitration language at many FIs now).
Hopefully, unless GTE is in danger of actually going under -- if it's instead just going to be a more painful period for them, they don't do something that will stain their reputation forever. Credit Unions exist because of their members, and unless it's literally the end of the line for them, to have a CU unilaterally go back on its word to its members -- when banking is built on trust -- it'll stain them forever.
CDmanFL
  |     |   35 posts since 2019
That’s exactly why I think GTE will grin and bear it until the end which isn’t that far away. They are already 2 years or 40% into this situation. And they are probably making money on their other lines of business in this resurgent economy. I remain hopeful.
111
  |     |   196 posts since 2019
Umm... Now you've got us curious...
blazer9
  |     |   139 posts since 2019
@ 111
Will re-post correct ? if need.
no changes at GTE
Rickny
  |     |   123 posts since 2017
On their Homepage at the bottom:

Federally Insured by NCUA. | Equal Housing Lender | GTE Financial reserves the right to change, suspend or terminate a product or promotion at any time without prior notice. All loans are subject to approval. Rates, terms, and conditions are subject to change.

Also, Credit unions are "not for profit organizations". mycreditunion.gov
Choice
  |     |   374 posts since 2020
Good marketing language. Applicable until a deal is struck and then the deal terms apply, ie “ fully integrated document.” Fraud is an exception. And Credits Unions are profit motivated and pay no income taxes…being labeled “non-profit or not for profit” is misleading…my 2cents
Rickny
  |     |   123 posts since 2017
Haven't read GTE's deposit terms but Ally has the following:

33. Changes in Terms
Please be aware that accounts or services can change over time. We reserve the right to discontinue
or make changes to accounts or services. We may change this Agreement, and we may add to or
delete from this Agreement, and the updated agreement will supersede all prior versions. We will
provide notice of changes, additions, and deletions as required by law. If we have provided advance
notice and you do not agree with a change, you may close your account(s) before the effective date
of the change, addition or deletion.
This seems very genera; to me.

   Who gets the "profits" you state Credit Unions make?  The owners are the members and they have no stockholders. Sometimes members get profits.  Maybe credit unions should not be allowed to be non profits and pay taxes? If they are making profits they should be paying taxes.
JWARREN
  |     |   33 posts since 2017
In the updated Account Disclosure, effective July 1, 2021:

IMPORTANT LEGAL NOTICE
"The GTE Financial Board of Directors may change the dividend rate on any GTE Financial account at any time. ..."

Truth-in-Savings Disclosure
"The Dividend Rate and Annual Percentage Yield on Certificate accounts (share and IRA) may change daily, but are locked in for the term of the account at the time of purchase."

Can both statements be true? Which governs an add-on CD opened 18 months ago?
CDmanFL
  |     |   35 posts since 2019
I’m guessing the Truth in Savings Disclosure is the governing one. I’m sticking with my gut feeling that GTE will honor these CDs until the end. They are very profitable and they quickly corrected their wrong from before and have since been very honorable. I hopeful it will continue.
Choice
  |     |   374 posts since 2020
Tie goes to the runner…ambiguities are construed against the drafter. BUT does one want to do business with a non-proofreading person that creates them?  Or, the noted language is, in effect, changed in connection with…you got it, a rate change!  And fraud is not alive and well?  And NCUA represents…it wants to protect the viability of CUs so there is less stress on the overall financial system…the unfairness of that requires patience too!  Temper your expectations with a dose of reality or go with the flavor of the day…”trust me”!
111
  |     |   196 posts since 2019
I hope for honesty and integrity from GTE as well, but also want to plan as much as possible for other scenarios. From now until 30 days after 7/1/21 I plan to add-on whatever funds I can easily and cheaply make available (as mentioned in my comment on June 6). However, that still leaves me with some CDs expiring early next year and even in early 2023 that I'd hoped to move to GTE.
I'm strongly considering opting-out of the Arbitration Agreement by mailing them a letter.
A question - for those DepositAccounts readers who have opted-out of Arbitration Agreements with other credit unions, or with banks - have you suffered any negative results? In particular, have you suffered any negative or adverse reactions from those CUs that could reasonably be attributed mainly to the fact that you opted-out? Thanks in advance.
senda
  |     |   30 posts since 2015
I sent a letter opting out of new arbitration language to one other CU a while back, and there was no problem or negative results because of it (of course the other CU had language that actually made sense and was honest, ie, let us know by a certain date in the future -- unlike GTE, which seems to require a time machine or black hole to travel back in time to 30 days after your first deposit years ago).

As for putting more money in, I guess you could certainly take out other funds that have no penalty attached (ie, accured interest) and add it if you want, but I certainly wouldn't do anything that incurs a fee (like close a CD early). You never know what GTE can do. They can do the stand-up thing and do nothing, or they can (apparently) unilaterally declare everyone's CDs to be a 0% even for initial funds (heck, why not -20%?). So my advice is don't go overboard.
CDmanFL
  |     |   35 posts since 2019
Do banks and CUs really have the right to terminate/change CDs if it turns out they no longer like the terms? If so, what gives? I thought our banking system was the envy of the world for its honesty, dependability and straightforwardness.
senda
  |     |   30 posts since 2015
The short answer is yes. It's happened before. Some examples:

(1) Valor CU: where even though the signed contracts for the CD stated funds could be added at any time, they stopped allowing funds to be added. Then they allowed them but charged a 3% "fee" to all new Add-On $ to make the 3% interest rate equal 0% for new Add-Ons. The NCUA sided with the CU because they were in danger of going under otherwise. They soon went under anyway, taken over by PenFed. When PenFed took them over, Valor still wasn't allowing Add-Ons, but PenFed in the end abided by the original terms and allowed people to add on to those CDs (at the proper 3%) once they were at PenFed, if customers asked them to do so (though this was never publicized).

(2) Darby Savings: Offered an Add-On CD offering 3%/4%/5% (going up each year). The signed CD contracts stated that funds could be added to at any time as well, but as they were in danger of going under, they suddenly stopped allowing Add-Ons. A lot of people complained to the FDIC, but before too long, Darby had to go out of business, and was taken over by another bank. The new bank (Ameris) gave everyone the middle finger, lowered everyone's (then 4% rate) to something like 0.005% -- which legally they could do, since they were another bank taking over a failed bank, they could void the contracts as long as they offered people a chance to take out their money with no penalty.

(3) Fort Knox CU: They raised their Early Withdrawal Penalty not just on new CDs, but on EXISITNG CDs -- changing the terms of the locked CD unilaterally. Their reputation was hit so bad because of this they had to change their name to Abound Credit Union -- but people still avoid Abound like the plague because of what Abound (Ft Knox) did.

NOTE: The NCUA sided with Fort Knox/Abound, based on generic clauses in the membership agreement.

You can see Ken's post on it here:
https://www.depositaccounts.com/blog/2011/09/ncua-rules-in-favor-of-credit-union-that-raised-early-w...

And of course, all this is unilateral. If YOU want to take your money out early without a penalty, or change the other terms of signed, time-locked CD, you can't.

The one thing I HAVEN'T seen (so far) is an FI changing the interest rate of money already deposited in a time-locked account (with the only exception I've seen being when a FI failed, and had to be taken over by a completely different CU or bank... then the new one taking them over doesn't have to abide by the old contracts as long as they let people take their money out without penalty... but that's only when the FI actually fails).

Finally, here's a post Ken wrote in 2014 that details even more examples of this, quoting a newspaper article written about Achieva CU in Flordia changing the terms in the middle of a CD:
https://www.depositaccounts.com/blog/credit-union-honor-terms-cds.html
And here's the Tampa Bay Times article:
https://www.tampabay.com/news/business/banking/credit-union-customers-yearlong-struggle-finally-over...
CDmanFL
  |     |   35 posts since 2019
I guess it makes sense for the NCUA to side with a CU when the CU is in danger of going under. Same logic for the FDIC with banks. That’s totally understandable and I agree with that. But GTE is profitable and has a relatively sound financial profile. That’s the good news. None of us want to see them in danger or worse. By them succeeding we all succeed. Fingers and toes crossed these CDs make it to maturity!
111
  |     |   196 posts since 2019
senda - You said “... (of course the other CU had language that actually made sense and was honest, ie, let us know by a certain date in the future - unlike GTE, which seems to require a time machine or black hole to travel back in time to 30 days after your first deposit years ago) ...” - yes that phrase of GTE's was both interesting and puzzling to me as well.
I'm going to ask GTE what they mean by this - but if their prior emails to me from October 2019 are any indication, I may not get a cogent or honest answer.


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