Credit union's move offers savers hope for CD rates
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 (www.melrosecu.org) 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?
Maybe I should talk this over with my shrink when I see him next week.
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