bank rates

Fort Knox Fed: You’re Out Of Our Rankings

After a long and heated discussion here at Bankaholic World Headquarters, we’ve decided to throw Fort Knox Federal Credit Union out of our rankings.

It’s not because Fort Knox Federal raised rates. Or because it stopped accepting applications from savers nationwide. Or because it had lousy customer service. (We haven’t received a single complaint.)

It’s because we’ve come to the conclusion that its $15 membership fee can substantially lower the effective return on many of its CDs.

The biggest hit can come on the 3- and 6-month certificates of deposit that have risen to the top our rankings of the best nationally available CD rates.

If you invested $500 in a 6-month CD paying the current 1.40% APY, you’d earn $3 in interest by the time it matured. Assuming the rate held, you’d have to roll that CD over four times to recoup your membership fee.

With a $1,000 deposit, you’d earn $7, so with one rollover you’d come close to breaking even. It would take a deposit of at least $2,200 to get your $15 back in six months.

But you don’t buy a CD to break even. You buy it to make money.

There are just too many instances like that in which savers trying to take advantage of Fort Knox Federal’s attractive rates won’t make money, or won’t make nearly as much as they expected, after the membership fee is subtracted from their earnings.

What about Melrose Credit Union – the other credit union in our rankings?

It stays because its membership fee is only $1, which has relatively little impact on the effective rate of most investments.

For members who have already paid their dues, Fort Knox Federal remains a good deal.

We’ll still follow its rates and keep you informed of the Kentucky credit union’s best deals.

We just won’t include those rates in our rankings.

Come back tomorrow and we’ll introduce a new leader in 3-month CD rates.

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Comments (2)
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2 Existing Comments
  1. RateRunner said:
    on July 31st at 11:58 am

    Five more banks were seized by regulators yesterday, pushing the total number of failed banks to 108 for the year. Don’t miss this or any of the other new posts on our Personal Finance blog. You can always reach it by clicking on the “Finance” tab at the top of every page.

  2. DealMaven said:
    on July 31st at 12:36 pm

    Britton & Koontz Bank continues to offer local customers in Mississippi and Louisiana one of the highest rates in the country on a rewards checking account. Its Smart Rate checking pays 5.25% APY on balances as high as $30,000 with a minimum deposit of only $100.