Credit union's move offers savers hope for CD rates

Hundred dollar bills

I know my sanity has fled when I become uncontrollably ecstatic about a New York-based credit union raising CD rates by about a tenth of a percentage point.

But that’s exactly what happened this morning when, doing my daily check of nationally available CDs, I discovered that Melrose Credit Union ( had actually increased rates.

Among other goodies, Melrose bumped its 3-year yields from 1.81% to 1.91%, its 4-year rates from 2.07% to 2.17%, and its 5-year deals from 2.57% to 2.68%.

My deliriously happy reaction had two causes.

First, the rate increase means I’ve now found a potential home for money I have in CDs maturing at Chase Bank, Allstate Bank and MetLife Bank in September.

I’ve maxed out, FDIC-wise, at airbanking, the website operated by MainStreet Bank in Virginia; I want to keep some room at Alliant Credit Union for certificates coming due later this fall; and, even armed with my 0.25% "loyalty reward," I’m loathe to double-down at Ally Bank by adding funds (with a new payable-on-death beneficiary) to a maturing CD.

Melrose -- if its rates hold up -- has solved my problem.

The second -- and more important -- reason I’m giddy is that it’s refreshing to find a financial institution that will, in the best New York City tradition, thumb its nose at Ben Bernanke and actually raise rates in this environment.

(I’m overlooking, of course, Melrose’s quarter-point rate slash three weeks ago.)

To put this in perspective:

Say that, today, I invest $100,000 in a Melrose 3-year certificate of deposit. That means, over its term, I’ll earn about $300 more in interest (credit unions call it "dividends") than if I’d put that money in yesterday.

That’s about what I pay monthly to keep my pool clean here in the hot (and dusty) California desert.

But at least I now have some reason for hope. I mean, perhaps other institutions that reflexively dropped rates after Bernanke’s last performance will follow Melrose’s example and tweak yields back upward.

And, as Everett Dirksen might have observed: "$300 here, $300 there -- pretty soon you’re talking about real money!”

Oh well, I can dream, can’t I?

Maybe the Melrose rate increase represents a temporary aberration by an isolated credit union.

Could it have something to do with last week’s earthquake? Or with Hurricane Irene?

Did the CEO fall and hit his head?

Did I?

Maybe I should talk this over with my shrink when I see him next week.

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