Alliant Credit Union: Bumpy Ride to High Yield

I wanted to have my money earn more interest than what it does in a money market account. So I joined Alliant Credit Union.

Alliant Credit Union is the 7th largest U.S. credit union based on asset size, with more than 250,000 members. It was originally United Airlines Employees’ Credit Union. Now anybody can join if they live or work near some northwest suburbs of Chicago or become a member of a PTA for a one-time fee as low as $3.

Credit unions are not for profit. They benefit the members in the form of higher interest rates on deposits and lower interest rates on loans. They don’t buy full-page ads in Wall Street Journal. They don’t sponsor NPR podcasts. They don’t pay bloggers referral money for new customers. That’s why you don’t hear as much about them.

I’m attracted to Alliant Credit Union because its accounts offer what I’m looking for. I considered a rewards checking account but I don’t want to bother tracking how many times I’ve used a debit card in a month. Alliant Credit Union’s accounts are hassle-free. Their checking account pays 1.75% if you opt-out of paper statement and have one electronic deposit (ACH or ATM) a month. Their savings account pays 2%. There’s no tier or cap on the amount that can earn at these rates. Nor is there a debit card usage requirement. I like them for their simplicity. They also offer a few freebies: free incoming wires, free credit score (updated quarterly), and free remote deposit capture.

Compare Alliant Credit Union with popular online bank ING DIRECT and a popular credit union Pentagon Federal Credit Union:

ING Direct Pentagon Federal Credit Union Alliant Credit Union
Checking < $50k: 0.25%
$50k – $100k : 1.50%
above $100k: 1.55%
0% 1.75%
Savings 1.30% first $10k: 0.35%
next $40k: 0.55%
next $50k: 0.65%
over $100k: 0.79%
2.00%
1-year CD 1.75% 1.25% 2.00%
3-year CD 1.50% 2.50% 2.50%
5-year CD 1.75% 3.00% 3.00%
Surcharge-free ATM network Allpoint ? Allpoint
AllianceOne
CO-OP
MoneyPass

Near where I live, Allpoint ATMs are mostly in gas stations, grocery stores, drug stores, and Target stores. CO-OP ATMs are mostly in 7-Eleven stores, other credit unions, and on corporate campuses. MoneyPass ATMs are mostly in U.S. Bank branches. That’s very good coverage for me.

Alliant Credit Union uses Andera for online account opening. After I enter the personal information, there’s an identity verification step through answering questions obtained from the credit reports. It asked me about a car loan I didn’t have. I answered “none of the above” and I passed. Alliant gave me $5 seed money for the savings account. I was able to fund another $995 by a credit card.

Trying to activate online banking turned out to be more trouble than I expected. In order to register for online banking, I needed my account number, which I received by mail two business days after I opened my account online. Then it asked for the debit card number. I had to wait another three business days. Then it asked for the debit card PIN. I had to wait three more business days.

Here I was, almost two weeks after I opened the account, finally with everything I needed, I entered everything online banking registration asked for. I created a password, agreed to the online banking terms and conditions, and picked answers to four security questions, before I got this lovely message:

So I called the 24-hour customer service center. The rep first said it was because I hadn’t activated my debit card yet. After she helped me activate the debit card, she gave me a temporary password. But there was no place to put in that temporary password. After a few more tries, my account is locked. Even the customer service rep couldn’t unlock it. She said she would have to escalate it and someone else would call me back the next day.

A rep did call me the next day and I was able to enroll with a temporary access code she gave me.

Aside from not having a smooth experience as a new member, what else do I NOT get from Alliant Credit Union? Small things.

  • The first box of checks is free but I don’t have a choice in the design.
  • The debit card still has the old Visa logo although Visa introduced the new logo almost three years ago.
  • There’s no direct download from Microsoft Money or Quicken. I will have to use the web interface to download.
  • I couldn’t provide free-text answers to the security questions. The answers had to be selected from a finite set in a dropdown.
  • There’s no way to create a login name for online banking. I must use my savings account number as the login.
  • Alliant-initiated ACH transfers are limited to $10,000 per day ($1,000/day during the first 30 days).

All these small things require investment. A state-of-the-art online banking system costs a lot of money. Banks I used in the past made the necessary investment. ING DIRECT is well known for its website’s ease of use. I don’t think Alliant Credit Union invested as much. They bought the online banking system from another credit union in California called Wescom. If you look at Wescom Credit Union’s eBranch and Alliant Credit Union’s SkyBranch, they are practically the same:

Would I like to have a better online banking system? Yes. Am I willing to pay for it with getting a lower yield on my money? No. That’s why I joined a credit union. I’m willing to tolerate the inconvenience. It’s a tradeoff. I get what I pay for and I’m happy.

I’m giving Alliant Credit Union the TFB Award 2009 for Best Hassle-Free Checking, Savings and CDs. Good rates and good ATM coverage are the main reasons for this win.

Alliant Credit Union does not pay me in any way if you join.

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Comments

  1. indexfundfan says

    I moved most of my banking services from mySmartCash to Alliant several months ago. I am satisfied with the Alliant account:

    * Perform check deposits at home.
    * I can also deposit a check on Thursday at the ATM near my workplace and the debit occurs only on the following Monday.
    * Very good rates
    * Very fast customer response. A secure message is typically replied in 1/2 hour on a business day

    Which is your Visa logo? Mine is the one shown on the top left hand corner of

    http://usa.visa.com/about_visa/ask_visa/index.html

  2. Phil says

    I am able to download my data directly from Quicken. Try going into the account in Quicken, go to the overview tab, and setup online access from there. You may need to disable it first and then re-enable from within Quicken.

  3. Evan says

    I’ve been using Alliant for a few years now and I think they’re great. When I first began using their SkyBranch online system, I thought it was a bit archaic. Over time, though, I’ve realized that it’s actually a great system giving you access to any account information you could possibly need, while allowing you to do just about anything you could possibly need to do.

    I have no problem downloading my banking data directly into Quicken. So, like Phil said, check out your setup in Quicken.

    Most of the small points you made are, just that, small points. The checks they send are your basic blue safety checks. But honestly, who cares what your checks look like. How often do we even use checks anymore? Ditto for the debit card. I never thought twice that the logo wasn’t the latest Visa logo (mine too is the old one). I actually think the card is actually much better looking than a lot of the other bank cards out there.

    The only thing I have ever found really annoying is the ACH transfer limit. The easy way around it is to initiate the transfer from your other bank. Chase allows much bigger ACH transfers, so I have been able to use them for most transactions (I also have Citibank, but they only allow $2,000 out a day…even more useless than the $10,000 limit).

    As for your login, it is a little annoying at first… after a while, entering your member number becomes second nature though.

  4. Jim says

    Does Alliant have FDIC or some other Federal backing that is similar? Where can I learn about this? I looked on their site but couldn’t find anything.

    Thanks!

  5. Harry Sit says

    Jim – Look at the bottom of their web site. Accounts with a federal credit union are insured to the same limit by NCUA as bank accounts by FDIC.

  6. John says

    Regarding Alliant’s insurance, you are correct that it is currently insured by the NCUA, which (as with the FDIC) is backed by the “full faith and credit” thingee.

    However, one item you should note. Alliant is not a federally-chartered credit union; it is a state-chartered credit union (in Illinois). As such, it may elect to have American Share Insurance (ASI), a private insurer not backed by the “full faith and credit” thingee.

    Mind you, a change from the NCUA to ASI would have to be announced to the members of the credit union and no such announcement has been made (or, for that matter, is contemplated, to my knowledge). In addition, an arcane regulation of the credit unions’ governing organization (it’s called the NCUISF or something like that) provides that you can break a CD penalty-free if there is a switch from NCUA to the ASI. Moreover, it is my understanding that a certain percent of the credit union members must acquiesce in the switch; it can’t be done by the Board unilaterally.

    Why would a credit union make the change? Money. The NCUA is tacking on higher premiums to cover corporate credit union losses. ASI doesn’t have that exposure.

    Bottom line: higher NCUA premiums will cut into Alliant’s ability to offer those stellar rates we have become accustomed to. I noticed the rate on the 2 year CD recently fell 45 basis points (2.55 to 2.10). Since there’s no particular advantage to going out a year longer for the same rate, Alliant’s savings account (at 2%) or one year CD (at 2.10%) look like the best alternative for “short” (up to two year) money at this point.

    Just my $.02.

  7. Aaron says

    This statement needs some clarification: “Now anybody can join if they live or work near Chicago…”

    Living and working in Chicago, I read this and became very interested in joining. I even spent about half an our reading more when I came to this page [http://www.alliantcreditunion.org/membership/eligibility/], which states:

    Who can join….

    Any person who lives or works in the following Chicagoland communities: Arlington Heights, Bensenville, Des Plaines, Elk Grove, Elmhurst, Franklin Park, Harwood Heights, Itasca, Mount Prospect, Northlake, Niles, Norridge, Park Ridge, Prospect Heights, River Grove, Rolling Meadows, Rosemont, Schiller Park, Wood Dale and Chicago O’Hare Airport property.

    So, residents of the city of Chicago aren’t eligible unless they meet other requirements. If you don’t live/work in the NW suburbs of Chicago, tough luck.

  8. Craig says

    I’ve had my Alliant Credit Union accounts (Share Savings and Checking) for well over a year and have been very satisfied with them…The have a reputation for maintaining high rates in the interest rate environment (whether up or down)….

    The access to over 75,000 surcharge free atms nationwide is a big plus and their Customer Service is also excellent….

    I’ve never been a big fan of the “Wescom CU Online Interface” that Alliant has used over the years…however in that regard, i have good news for you…Alliant is redesigning it’s Online Banking Interface and this is being done “in-house” as opposed to the often usual way of using a 3rd party provider…

    It’s currently scheduled to be launched in May of the year and should be a vast improvement over what they are using now..Also, since it’s “in-house” they will have total control of making changes to it as is needed from Customer Feedback….

    So, their one weak point hopefully will soon be vanishing and replaced by a much improved Online Banking experience….

    PS: and the rate has been confirmed for February….it’s remaining at 2% for Share Savings and 1.75% for the Interest Checking…

  9. Mark says

    It must be a new thing, but apparently you can now also join by making at least a $10 donation to the Orphan Foundation of America, which is what I did seeing as how I live in New Mexico (http://www.alliantcreditunion.org/membership/eligibility/ofa/). I’ve only just completed the sign-up process and am waiting for all my stuff in the mail so that I can access the online banking. I am quite excited to switch over all my accounts from my current bank entirely to Alliant. I love that they have every sort of account readily available and easy to open, including IRAs, HSAs and ESAs. With my current/old bank, it was such a hassle to open these special accounts, if they were even available. Before I found Alliant, I was going to have to have accounts spread across two or three banks to get decent rates; one bank for regular banking, one for IRAs and another still for an HSA.

  10. John Q. Public says

    What I appreciate most about Alliant is the fact that I am not nagged to buy a boatload of crap every time I call them. And they actually speak English!

  11. Len says

    Your table seems to indicate that ING Direct interest rates apply to the marginal balance above the $50k and $100k thresholds. ING’s site now states that rates for Electric Orange paperless checking instead apply to the full balance:

    “If your balance is $49,999.99 or less, you earn an annual percentage yield of 0.25% . If your balance is between $50,000-$99,999.99, your entire balance earns 1.10% APY; and if your balance is $100,000 or more you will earn 1.15% APY on your entire balance! (Rates variable, as of 02/23/2011

    I realize your original article is dated at this point, but as is typical, it still stands as a valuable reference for readers.

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