Because that just seems almost too good to be true?? I've done business with them for more than 14 years and they have always been great, THey tell me that it is non-callable, and is NCUA insured.
Is there any other questions that i should be asking about this. Cause the best rate i have found for a CD, and I have REALLY looked hard over the last couple years on 6 nad 12 month terms is 5.75%
THey Have three locations in the area and have been around like since 1960.
Is there any other info i should be seeking about this??
2007-07-06 16:13:44 · 7 answers · asked by the d 6 in Business & Finance ➔ Investing
That rate sounds pretty high to me, especially since it's nearly 2% more than the highest paying bank CDs. You should probably do a little more homework before investing.
I'd suggest going to http://www.ncua.gov/indexdata.html to ensure that it really is insured by the NCUA, and I'd review a financial report to make sure the numbers aren't out of whack. In addition, I'd go to http://www.bankrate.com/brm/safesound/ss_home.asp to see how BankRate.com ranks them based on financial strength and security.
If you find that your Credit Union is insured by the NCUA, and it gets a rating of 3 stars or more from BankRate, I'd feel pretty good about taking the deal.
2007-07-06 17:37:10 · answer #1 · answered by Anonymous · 2⤊ 0⤋
Jim H's answer is very good. Do some additional research.
However, this type of offer is not as unusual as you might think. We actually covered this exact topic in my Financial Institution Management class.
Financial institutions (banks, CUs, etc.) rely on cash to operate. They "borrow" cash from depositors and lend it out to borrowers. They make money on the difference in rates. In the case of a CU that difference is usually much smaller.
Now comes the tricky part. Financial institutions have to have a certain amount of cash on hand to cover their liabilities (such as handing out the money for a loan) by law. Sometimes, they do not have enough cash to cover these liabilities, and borrowing from the Feds is not an option (there are several reasons for this that I won't get into here). In that case they make special offers such as this one. Your CU has a need for a certain amount of money over the next 5 months that makes them willing to "borrow" from you at 7.5%
It is quite common for savvy investors to call a bank (or CU) daily to find out "what are your specials?" The specials are usually for higher interest rates and non-standard time periods (such as your 5 month CD offer).
So do the research as Jim H says, and then take advantage of the offer before it's gone.
Hope this helps, and good luck.
2007-07-06 17:58:19 · answer #2 · answered by Kurt B 3 · 1⤊ 0⤋
It sounds very good, unless it is a 3 year CD or something like that and for the first 5 months it pays the high interest rate.
2007-07-06 16:20:57 · answer #3 · answered by Nelson_DeVon 7 · 0⤊ 0⤋
No. It is very common for credit unions to offer much higher rates than traditional banks. CU's are not for profit institutions so they have nothing more to do other than recycle their revenues back to the members. Unlike traditional banks they aren't investing your money and giving you a cut. They are recycling the money back to you.
2007-07-06 16:25:48 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Make sure it is FDIC insured and a fixed rate, read the fine print and you should be fine. They may have terms like leaving the money longer or limited to only the first few dollars.
2007-07-06 16:28:29 · answer #5 · answered by shipwreck 7 · 1⤊ 0⤋
Verify with NCUA. Make sure your "obligation" ends after 5 months. Ask them why their rate is so good.
2007-07-06 16:48:33 · answer #6 · answered by Common Sense 7 · 1⤊ 0⤋
What's the name of the CU?
2007-07-06 16:18:17 · answer #7 · answered by mister_galager 5 · 0⤊ 0⤋