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Credit union: Pul-lease take your money
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LAS VEGAS REVIEW-JOURNAL
Nevada Federal Credit Union has a deal for big savers: Withdraw your money and you'll get a bonus.
The credit union, one of the largest in Nevada, figures that deposits from members who don't have a checking account, mortgage loan or any other products are expensive.
Brad Beal, chief executive officer of Nevada Federal Credit Union, estimates that about 1,600 of Nevada Federal's 85,000 members only use the credit union for savings.
The financial institution typically uses member deposits, including certificates of deposit and money market accounts, to make loans, which typically bear higher rates than deposits.
Beal figures those interest-bearing accounts are a money-losing proposition in Nevada's current depressed economy.
"We don't have any loan demand right now," Beal said.
The credit union is investing in short-term Treasurys and earns about one-quarter of 1 percent on those government securities on average, but it was paying 0.4 percent to customers with savings.
In addition, the credit union expects the National Credit Union Administration to boost deposit insurance premiums by 0.15 percent to 0.4 percent this year.
For each $100 million in deposits, that premium increase will increase Nevada Federal's costs up to $400,000 yearly, Beal said.
While Nevada Federal is well capitalized, reducing deposits also will increase its net worth as a percent of assets. Beal said that is a secondary reason for reducing total deposits.
It's an unusual strategy. Another credit union manager said the strategy makes good sense in the short term but Nevada Federal also may be unable to get the members back again when demand for loans resumes.
Starting Monday, the credit union has cut the variable interest rates on deposits held by members that only save money to zero.
"We're losing money, and they are not making money," Beal said.
So the credit union will pay these savers a $25 bonus for withdrawing amounts between $25,000 and $49,999. The bonus jumps to $50 for amounts up to $74,999 and goes to $75 for larger sums.
The credit union staff, he said, will help the savers find another place to park their money.
Contact reporter John G. Edwards at jedwards@ reviewjournal.com or 702-383-0420.
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This is a really dumb move. My son opened a savings account about a year ago with NFCU, when they had a promotion encouraging kids to do so. Now he gets no interest, what kind of lesson is that????
I suppose a maintenance fee is next.
Well, I guess we'll have to look for another place for all of our money.
STATE FARM HAS BANKS AND WANTS YOUR MONEY!
WHAT IS WRONG WITH PEOPLE? JOIN OUR CREDIT UNION AND DEPOSIT YOUR SAVINGS ELSEWHERE? THIS IS A SURE SIGN THE CREDIT UNION WILL FAIL, IT'S THE BEGINNING OF THE END AND EVERYONE SHOULD GET OUT WHILE THEY CAN!
THEY'LL SPEND SEVEN TIMES WHAT THIER LOSING TO TRY TO GET CUSTOMERS BACK WHEN THEY NEED THEM....
With interest rates so low, why park it at NFCU in the first place? We only use NFCU as a money transfer agent and keep our savings in a money market account at an internet bank (emigrant.) The only money we keep at NFCU is for paying bills as they come due. I have no problem witht the new NFCU policy.
I had to laugh at Unhappy long term customers line that he will be on a mission to increase his savings account balance at NFCU. Talk about cutting off your nose to spite your face.