bank rates

NASA Federal Drops Rate Change Clause

magnifying glassIt looks like NASA Federal Credit Union no longer claims the right to unilaterally lower the rate on outstanding CDs.

Back in July and August, I wrote two posts about NASA.

The first complained of the difficulty I had getting my hands on Truth in Savings Act disclosures for its CDs.

The second complained about what I found in those disclosures when NASA finally added a link to them on its website (www.nasafcu.org).

Those disclosures contained the following extraordinary language about certificates of deposit: The rate will not change during the term of your certificate unless the Credit Union notifies you at least 30 calendar days prior to any rate decrease.

NASA was asserting, in effect, the right to lower the rate on outstanding CDs.

I suspect my post about this language didn’t sit well with some NASA members (and potential members).

Whatever the case, I can now report that, among the welter of documents currently linked on NASA’s website, is one entitled “Certificate Terms & Conditions,” dated October 2014, which does not contain the objectionable language about a unilateral right to lower CD rates.

Thus, it looks like the credit union is no longer reserving this right.

Unfortunately, NASA hasn’t yet troubled to change the linked document entitled “Truth in Savings Disclosures,” dated July 2014, which still contains the language.

I have faith, though, that when and if someone points out this inconsistency to NASA, it will get around to conforming the latter to the former.

I don’t know the origin of the rate adjustment provision, but it was clearly out of place, if not out of bounds, in a disclosure concerning CDs that are not expressly identified as being adjustable or variable rate.

Maybe the language was put in by some overly zealous lawyer. Or perhaps NASA thought it only applied to adjustable or variable-rate CDs.

In my view, the only time it’s appropriate to lower the rate on a fixed-rate CD is when the issuing institution fails, its CDs are assumed by another institution that changes the rates and, in accordance with federal law, the assuming institution allows depositors to close their CDs and get their money back.

In any event, building a right into your CDs to willy-nilly lower rates – as NASA did – is certainly no way to cultivate member goodwill, or to market your CDs, for that matter.

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  1. Charles Rechlin said:
    on October 29th at 02:10 pm

    As of this morning, NASA has removed the rate change clause from its “Truth in Savings Disclosures” document, which is now dated October 2014.”