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NCUA guarantees two-years for Community Investment CDs
ALEXANDRIA, Va. (5/26/09)— The National Credit Union Administration (NCUA) will now guarantee all principal and quarterly fixed-rate dividend payments on new two-year certificates of deposit (CDs) in the National Credit Union Foundation’s (NCUF) Community Investment Fund (CIF). CIF allows members of corporate credit unions to earn dividends while donating to credit union charitable organizations--without creating an expense on the donors’ balance sheets. New deposits in CIF will help reduce all credit unions’ expenses for NCUA’s Corporate Stabilization Program. “We commend NCUA for taking action to offer credit union investors an attractive new option to earn federally guaranteed dividends while donating to credit union charities,” said Steve Bosack, NCUF deputy director. “Increasing deposits in the Community Investment Fund will provide critically needed programs and grants to more credit union members across America.” Half of CIF dividends are donated to NCUF. NCUF dedicates half of those donations to fund national programs including REAL Solutions, Credit Union Development Education, Innovation Grants, Biz Kid$, and CUAid. NCUF grants the other half of CIF donations to each investor’s state credit union foundation or league. State credit union organizations use their CIF grants for charitable activities including financial education, training, credit union membership outreach, small credit union development, affordable housing, disaster relief, and more. CIF provides about two-thirds of revenues for NCUF and many state credit union foundations. Recognizing CIF’s unique structure and widespread impact, the Association of Fundraising Professionals honored CIF with its Award for Fundraising Excellence. For investors with tight liquidity, CIF is also available in special S-115 share accounts at corporate credit unions. NCUA will guarantee all principal and variable-rate dividend payments in CIF share accounts throughout the course of NCUA’s rolling guarantee program. Given today’s steep yield curve, share accountholders can more than triple their dividends by transferring to fixed-rate CIF CDs (C-40 accounts). The other CIF options are three-year CDs and five-year CDs. Both offer higher dividends than the new federally guaranteed two-year CIF CDs because their longer terms stretch beyond NCUA’s current guarantee program. Normally, CIF share account holders are required to give 90 days' notice before withdrawing. But NCUA has authorized corporate credit unions to waive the 90-day notice requirement when share accountholders transfer directly to CIF CDs. Credit unions interested in the latest rates or CIF investment options can contact NCUF or a corporate credit union. For more information, use the resource link below.
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