The Georgetown University Alumni and Student Federal Credit Union lowered the annual rate of interest it pays on savings accounts by 60 percent on Oct. 1, catching many account holders off guard.
The credit union announced the change in its monthly statement emails sent to account holders last Friday, when the change from 1 percent to 0.4 percent interest took effect.
The rate of 0.4 percent remains above the national average of 0.18 percent. The credit union also lowered rates from 1.25 percent to 0.7 percent on six-month certificates of deposit and from 1.5 percent to 1 percent on 12-month CDs.
By comparison, the only other bank with an on-campus office, Chevy Chase Bank – which was bought in 2009 by Capital One – pays 0.05 percent interest on savings accounts with balances below $10,000.
Chief Executive Officer Arjun Mehta (SFS ’11) said the realities of the market made the changes necessary, even if the credit union seeks to offer its niche group of customers a better deal than competing banks.
“The credit union constantly seeks to offer the highest interest rate possible … but I think ultimately [1 percent] is not feasible in this low interest rate environment,” Mehta said. “This is still a very good rate.”
Some students, like Rita Pearson (SFS ’13), felt that the credit union should have made a greater effort to notify account holders about the changes.
“I wouldn’t have known until I checked [my statement] a month from now,” Pearson said.
Although she is not very concerned, Colleen Tapen (COL ’13) expected more personal customer service from the credit union.
“Maybe more warning.that they were considering this, to get people’s feedback, would have been good,” she said. “That’s the whole reason you choose a bank like GUASFCU, because it’s more personal.”
ehta said the credit union has given careful thought to how it distributes key announcements to its members.
“We don’t intend to spam them with emails … The way we communicate with them is by statements and on the website,” he said.
The suddenness of the cuts upset some GUASFCU account holders, such as Michelle Pliskin (MSB ’13).
“[The cut was] 60 percent. I’m very upset. They should’ve made an announcement … I had no knowledge that they were even thinking about it,” Pliskin said.
Some students were ambivalent about the change.
“It didn’t surprise me,” said Spencer Daum (SFS ’13), who has an account with the credit union to save money for tuition. “And the rate is still higher than most banks around here.”
Madeline Collins (COL ’13) said that she did not choose GUASFCU for the rate of interest it paid.
“I bank with them because they’re a local institution and I like that, not because of the interest rates and financial policies,” she said. “It’s not one of those big national banks or a corporate behemoth.”