Fort Knox Federal Credit Union Changes Terms On Existing CDs

This is not an April Fool’s joke. Ken at reported yesterday that a credit union in Kentucky is reneging the terms on its existing CDs.

Fort Knox Federal Credit Union told customers the early withdrawal penalty on their CDs will go up from 3 months to 6 months. The change affects not only new CDs but also existing CDs bought before the announcement or the effective date.

The credit union claims it can change the term mid-stream because it has reserved the rights to make changes with a 30-day notice in the membership agreement.

Although I don’t buy a long-term CD with the intention to break it at opportune times, I don’t think it’s right for a bank or credit union to change any terms after the CD is issued.

If they can change the early withdrawal penalty, would they be able to change the rate too? Say you have a 5-year CD with a 1-year early termination penalty. In year 3 they drop the rate to 0.1% with a 30-day notice. What do you do? Withdraw and pay 1-year early termination penalty or hold at 0.1%?

I’m very disappointed to see a credit union do this. It tarnishes the customer-friendly image of all credit unions. You can’t assume just because it’s a members-owned, not-for-profit credit union, it’s always going to work for the best interest of the members.

To see a credit union in an area with a large military base and many service persons and their families as members do this is a double disappointment.

All Fort Knox FCU CD holders should complain to NCUA and stop this from becoming a precedent. If the credit union insists on going ahead, someone should take an early withdrawal, pay the penalty, and then sue the credit union.

Read more in Credit Union Increases Early Withdrawal Penalty on Existing CDs at

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