National Buzz Spreads on Credit Union CD Deals, Paragon FCU Spotlighted in Wall Street Journal
MONTVALE, N.J. - It's not every day that credit unions get press in the Wall Street Journal - let alone positive press - but Paragon Federal Credit Union has certainly received its share. The $400 million credit union was touted by the publication as having one of the country's better...
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MONTVALE, N.J. – It’s not every day that credit unions get press in the Wall Street Journal – let alone positive press – but Paragon Federal Credit Union has certainly received its share. The $400 million credit union was touted by the publication as having one of the country’s better certificate of deposit deals in a March 30 article about CD rates hitting a five-year high. Paragon Federal has been offering current members a 12-month CD with an 8% annual percentage rate. To qualify, members must have a Paragon checking account with a minimum $100 direct deposit and the CD is capped at $2,000. Since the promotion began running in early March, the credit union has opened more than 100 new accounts, said Mike Puzycki, marketing manager. Up to 15 new accounts are being opened each day and calls are coming from consumers all over the region wanting the CD deal. The offer is open only to residents within Paragon Federal’s field of membership in Bergen and Passaic counties in New Jersey and certain parts of other counties in New Jersey, New York and Pennsylvania. “We’re getting a lot of buzz, it has put us on the map,” Puzycki said. “We floated the 8% out there to get a response and we got it.” Indeed, Paragon Federal’s local competition is very stiff as it goes head to head with Bank of America, Washington Mutual, Wachovia as well as online banks from ING, MNBA and Citibank, Puzycki said. Reaction from these institutions has, so far, been quiet, he noticed. “We’ve had some people say `are you nuts,’ ” Puzycki said. “ But not when you look at Bank of America, which was giving away $100 to open up a new checking account. What we’re doing is not that out of line.” Paragon Federal’s campaign was originally scheduled to run until March 30, but the overwhelming response has prompted the CD deal to be available through April 21. The credit union is taking the promotion a step further. For every new account opened, it will donate $5 to the local ambulance squads, which are run by volunteers, Puzycki said. A minimum of $100 will be collected from Paragon Federal’s nine branches. Even after going to a community charter two years ago, it still counts several underserved areas among its membership base. “We’re small fish in a very big pond,” Puzycki said. “We don’t have the name recognition yet, but we’re building.” The Wall Street Journal article said “sometimes the most competitive CD rates can be found at smaller banks or credit unions that are offering special deals in their local markets.” As banks continue to boost yields on CDs to their highest levels in five years and as the Federal Reserve Board continues to raise rates, consumers are looking for places to park cash, it reported. According to some industry watchers, the average yield on one-year CDs nationwide is currently around 3.62%. Another financial institution getting buzz on its CD deal is $330 million Christian Community Credit Union in Covina, Calif. Rolled out Jan. 1, its 7-month CD has a 6% APY with a cap of $2,500 to open. Ninety accounts totaling $200,000 have been opened, averaging one per day, said Dave Estridge, executive vice president. “We’re a single-office credit union with a national field of membership,” Estridge said. “This introductory offer is a way for (consumers) to sample what we have to offer.” Christian Community ran a similar deal a few years ago that carried a 10% APY for the first year on a new savings account. The offer did so well, a number of new member relationships were formed, Estridge said. The credit union plans to run its current CD deal “indefinitely,” he added. “If interest rates push up, we’ll keep pushing ours up,” Estridge said. At the end of February, consumers parked more than $1 trillion in CDs, the Wall Street Journal reported citing Federal Reserve data, adding that the last time assets in CDs exceeded $1 trillion was in 2001. -
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