It's Time To Allow (and Suspend Ewps On) Partial Withdrawals

Bozo | Mar 23, 2020 | 1,375 posts since 2011

I received a rather noncommittal response from NFCU today on my suggestion that NFCU suspend EWPs and allow partial withdrawals from CDs. Obviously, it is in NFCU's interest to have as many people as possible zero-out their CDs, with their tasty 2%+ plus interest rates, as quickly as possible.

This is not the time for credit unions to adhere to fine print. many folks are hurting: Requiring savers to cash-out CDs earning relatively tasty yields helps neither their members nor the economy as a whole.

Partial withdrawals should be permitted. Period. EWPs should be waived. Period.

The credit union industry should understand the saver ecosystem is more fragile than they might suspect.

Just my $.02.

Stay safe.

Regards,

Bozo

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pgroove_fan | Mar 23, 2020 | 168 posts since 2019

From my observations here on DA and over on DoC, allowing blanket partial withdrawals with waived EWPs would lead at least some users to treat their weakest CDs like checking accounts. "Anything within the rules" is a standard argument from the sorts of folks I'm referring to.

alan1 | Mar 23, 2020 | 880 posts since 2015

I tend to agree with pgroove_fan. And I think there are additional reasons to be cautious about having a "one size fits all" blanket rule.

For example, there is at least one credit union with a membership base in the transportation industry, and many credit unions with membership based on particular industries or companies. Normal inflows of funds from members' paychecks may evaporate; withdrawals of liquid funds may be quite rapid. And while some members may qualify for unemployment compensation, those deposits will be withdrawn very quickly. A blanket policy could threaten the survival of the credit union, which could have detrimental effects on its members, employees and a community.

I certainly don't trust people who run credit unions to just "do the right thing." And, as pgroove_fan noted, there's no reason to trust all credit union members to do the right thing.

Bozo has written about a serious problem. One thing that I think should be done (and I haven't thought this through ) might be for tax laws to be temporarily changed to permit people to withdraw funds (perhaps subject to certain limitations) from IRAs (and 401k plans) without being subjected to a tax penalty. It may not be much, but it's something.

And good for Bozo for communicating his views to the credit union. Regardless of the situation at any particular credit union, it might be helpful (and can't hurt) for members to express their view that the credit union should do _something_ in this area.

So much needs to be done. So many people need money NOW. I don't know how much waivers of early withdrawal penalties would help, but it's something.

Bozo | Mar 24, 2020 | 1,375 posts since 2011

"So many people need money NOW."

Alan1, totally agree. Whether some folks with sharp elbows or investing strategies take advantage, the point would appear to be the vast majority of people just might need to free up some cash to pay the bills. They might not need all of their CDs to do so, just a part.

Hint: if, indeed, "our members are the mission", the mission demands action.

alan1 | Mar 23, 2020 | 880 posts since 2015

People interested in this thread might want to lake a look at what Amalgamated Bank is doing and proposing. I posted about it on the Bank Promotions portion of the Forum.

https://www.depositaccounts.com/banks/amalgamated-bank.html#promo41317

Choice | Mar 24, 2020 | 937 posts since 2020

If any FI waives EWPs then my counteroffer to them is raise my rate or I’m gone. Only the current relative high rate FIs will offer to waive...unless in immediate need of cash...no way. Good scheme.

Ratesaver | Mar 25, 2020 | 187 posts since 2013

My 2cents is my recent acc. of actions with First National Bank of Pittsburgh... Long story but about a month ago I wanted to cash out 4cds … After looking at their EWP I quickly decided no.. I would have had to pay 3% of the amt. I wanted to take out plus $25.00 ok nuts. I only had 1month to go so I waited to actually yesterday to get the money... (the cds are spaced out over the month... I had asked if they would just put them into my savings acc. They said no...With the virus you would think they would wave the other time for the others to came due as I asked.. No... I went in yesterday and now I have to go in 3 more times to cash out …. Nuts... I opened the Navy 2.23% with a small amt. and not will move more into it as it is a addon...cd... Don't bank with this bank... I hope I don't contact the virus going in 3 more times....

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