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Income Now CDs are designed to provide a pre-determined monthly payment made up of both principal and interest and have a zero balance at the maturity date. There is a $5,000 minimum investment and early withdrawal penalties apply. Call or click here to calculate monthly payments scenarios.
This is not an insurance product.
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Certificate
Term
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Interest
Rate
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Annual Percentage Yield
(APY)
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Money Market & IRA
MINIMUM CERTIFICATE AMOUNT
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| 60 Months / 5 Years |
3.50% |
3.50% |
$5,000 |
| 84 Months / 7 Years |
3.75% |
3.75% |
$10,000 |
| 120 Months / 10 Years |
3.80% |
3.80% |
$10,000 |
| 180 Months / 15 Years |
3.90% |
3.90% |
$10,000 |
| 240 Months / 20 Years |
4.00% |
4.00% |
$10,000 |
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APY = Annual Percentage Yield. Fees could reduce earnings on accounts.
"INCOME NOW CD" (Certificate of Deposit)
FAQ’s -- Frequently Asked Questions (printable PDF version)
1. What is an Alliance “Income Now CD?”
It is a unique form of a federally insured Certificate of Deposit (CD), used to provide regular monthly cash flow payments consisting of interest and principal.
2. How does it work?
A member deposits a specified amount into an "Income Now CD" at Alliance Credit Union. Interest is accrued daily and added to the CD balance monthly just before the monthly payment distribution is made. The CD owner signs an authorization agreement directing Alliance to make level monthly payments from the "Income Now CD," until the CD matures. The payments consist of both interest and principal until the full value of the CD is paid out and the CD balance is zero.
Example: a member depositing $50,000 into a 5 year "Income Now CD," using an interest rate of 3.50% APY, will receive $908.36 monthly for 60 months (5 years). The monthly payments of interest and principal will end upon maturity of the CD. In this example the total payments received would amount to $54,501.60.
If the CD owner dies before all 60 monthly payments are made, the designated “payable upon death” beneficiary receives the remaining monthly payments, or may elect to take a lump sum payout of the CD balance.
3. Who is a prime candidate to open an "Income Now CD?"
Any member looking for an investment that provides a fixed rate of interest for a fixed period of time and wants monthly cash flow of interest and principal. Members nearing retirement, or already retired, looking for regular monthly payments to supplement their income are prime candidates.
4. What are the primary advantages of the “Income Now CD?”
Your funds are deposited in a federally insured financial institution that provides a guaranteed fixed payment amount every month. You can rely on predictable cash flow every month which is helpful to for budgeting purposes; this is especially true for members on a fixed-income. The interest rate is locked in for the entire period, and cannot go down. There are no service charges or special fees.
5. Is there any risk?
All deposits are insured by The National Credit Union Administration (NCUA), a federal government agency, up to $250,000 per account, or up to an additional $250,000 for Individual Retirement Accounts (IRAs).
6. What if I want to deposit more than $250,000?
Deposits greater than $250,000 can be made. Special arrangements can include other family members as beneficiaries to obtain $250,000 of insurance on each account. In this manner, multiple separate accounts would each have $250,000 of insurance.
7. Can I select how many months/years I want to receive payments? Are there any limits?
You can select any one of five time period between 5 years (60 months) and 20 years (240 months) to receive your monthly payments. The options are 5, 7, 10, 15, or 20 year periods. $5,000 is the minimum initial deposit for the 5-year term. $10,000 is the minimum initial balance for all terms greater than 5-years.
8. When do monthly payments begin?
Usually they begin within 30 days after the account is opened.
9. Are there any special concerns I should consider?
It is important to understand that an "Income Now CD" pays interest and principle over the term of the investment. At the end of the CD term you will not have any funds left to redeem.
10. Can my spouse and I both be named as joint owners of an Income Now CD?
Yes, you may be joint owners with “Right of Survivorship”. Additionally, one or more beneficiaries may be named in the event of the death of both joint owners. Alternately, you may also have the "Income Now CD" issued in your name only; again, one or more beneficiaries may be named.
11. Are there any restrictions on naming a “Payable on Death” beneficiary?
You may name whomever you choose as your beneficiary. If there is more than one “payable on death” beneficiary they will receive equal distributions of funds.
An "Income Now CD" owner can change or remove a beneficiary as provided under the “Designation of Payable on Death Beneficiary(ies) agreement on the back of the CD.
12. Can Alliance arrange for the transfer of existing IRA from my mutual fund or bank?
Yes, an Alliance Financial Service Representative will gladly assist you with the transfer.
13. Why is this "Income Now CD" preferable to just opening a regular CD at Alliance and collecting interest?
The payment amount you receive each month is much larger since you are receiving the interest and a portion of the principal each month.
Using the example in item number 2 above, a 15 year Income Now CD at 4.05% APY, the monthly payment will be $369.25. A traditional $50,000 CD with the principal left intact, will earn $168.75 in monthly interest. So, you will receive a monthly payment of $200.50 more for 180 months from an "Income now CD" but you will not have any principal left at end of the 15 year period - with a traditional CD, you (or your beneficiary) would still have $50,000 principal left at maturity.
14. Do I have the choice of receiving a monthly check, or having the funds automatically deposited into my checking account?
Alliance will electronically deposit funds into the account of your choice. While we would like to have the deposit to an Alliance account, that is not a requirement. We can electronically transfer "Income Now CD" monthly payments into an account at another financial institution. We do not issue checks on the "Income Now CD" (except for the final monthly payment).
15. Are there any penalties for early withdrawal of an Alliance "Income Now CD?"
An early redemption penalty will be assessed equal to 180 days interest unless except when the CD owner:
1) is permanently disabled, terminally ill or admitted to a nursing home,
2) dies and the beneficiary chooses a lump sum distribution, then the only penalty that will apply is the loss of accrued interest since the last posting of monthly interest.
16. Should I discuss this with my family members, attorney, or CPA?
We encourage you to share this document with family members, legal counsel and/or financial advisor, before investing. Please feel free to ask them to call Alliance to answer their questions, 636-343-7005, ext. 2000.
Senior Citizens:
Please note that certain financial advisors strongly recommend senior citizens to diversify their investments and to minimize their risks; suggesting that no more than one third (1/3) of assets be committed to any one investment.
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"Income Now CDs" are designed to provide a pre-determined monthly payment made up of both principal and interest and have a zero balance at the maturity date. There is a $5,000 minimum investment and early withdrawal penalties apply.
A complete list of account fees and disclosures are available on request.
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