Savings Disclosures & Truth in Savings Act (TISA)

Rate Information

Savings, Holiday, Health Savings, Checking, Money Market and e-Money Market accounts are designated as variable-rate Accounts. The dividend rates and annual percentage yields may change daily as determined by the LAFCU Board of Directors.

Share Certificates are designated as fixed-rate accounts. An IRA Share Certificate may be designated as a fixed-rate account or a variable-rate account. The dividend rate and annual percentage yield will not change until certificate maturity for a fixed-rate account. The offering dividend and annual percentage yields for the fixed rate accounts may change daily as determined by the LAFCU Board of Directors. The index for variable-rate IRA Share Certificates is based on the 26-week Treasury Bill. The dividend rate is 1/2% above the 26-week Treasury Bill rate and is adjusted each calendar quarter in accordance with the rate in effect the first business day of the quarter. The annual percentage yields for certificates are based on an assumption that the dividends will remain in the account for one year. A withdrawal will reduce earnings.

Compounding and Crediting Frequency

Savings (Share), Health Savings, and Checking (Share Draft) accounts: Dividends for these accounts will be compounded and credited quarterly. For this account type, the dividend period is quarterly, for example, the beginning date of the first dividend period of the calendar year is January 1, and the ending date of such dividend period is March 31. All other dividend periods follow this same pattern of dates. The dividend declaration date follows the ending date of a dividend period, and for the example is April 1.

Holiday Account: The dividend period and crediting frequency will be compounded and credited Monthly. If you close your account before dividends are paid, you will receive the accrued dividends through the date that the account is closed.

Money Market, Share Certificate, Senior Share Certificate, Senior Jumbo Share Certificate, Jumbo Share Certificate, and all IRA Share Certificate accounts: Dividends for these accounts will be compounded daily and credited monthly or quarterly (except Money Market and e-Money Market, which are only quarterly), on the last day of the crediting period, and at maturity, as determined at account opening or renewal. Monthly crediting of dividends must be arranged at the time the certificate is opened or renewed. Dividends may be compounded into the certificate balance, transferred to your Savings or Checking account or mailed to your address on file as designated by you at the opening or renewal of the certificate. If you do not instruct us on how to pay the dividends, they will be credited quarterly and compounded in the certificate. IRAs are governed by Federal tax laws. IRA Share Certificate withdrawals will be processed within Federal guidelines, which could include substantial penalties.

Minimum Balance Requirements/Fees

Savings (Share) Account: The minimum deposit required to open a Savings Account is the purchase of a $5 share in LAFCU. A non-refundable $5 membership fee is also required for new members. A $50 minimum balance must be maintained (combined of all your LAFCU savings & checking accounts) within six months of account opening to avoid a monthly fee (excluding members age 17 and younger). If the minimum balance is not maintained, we may close your account. All account balances earn the disclosed annual percentage yield. The par value of a share at LAFCU is $5.00.

Holiday Account: The minimum required opening deposit is $10. You must maintain a minimum average daily balance of $10 to obtain the disclosed annual percentage yield.

Health Savings Account (HSA): The minimum deposit required to open an HSA is $50. You must maintain an average daily balance of $2,500 in your Account to obtain the disclosed annual percentage yield.

Checking Account: The minimum deposit required to open a checking account is $10. You must maintain an average daily balance of $1,000 in your Account to obtain the disclosed annual percentage yield.

Money Market Account: The minimum deposit required to open any Money Market Account is $2,500. You must maintain a minimum average daily balance of $2,500 in your account in a dividend period to obtain the disclosed annual percentage yield.

E-Money Market Only: Fees are charged if you conduct transactions with this account at a LAFCU branch or Shared Branch or with a LAFCU phone representative.

Regular Share Certificate: The minimum required opening deposit is $1,000. You must maintain a minimum daily balance of $1,000 to obtain the disclosed annual percentage yield.

"Starter" Certificate: Only for members age 25 & under. Minimum opening deposit & daily balance to earn yield is $100. Additional deposits of $50 or more can be made any time without penalty & without changing the rate or term, until the balance is $10,000.

Senior Share Certificate: The minimum required opening deposit is $1,000. You must maintain a minimum daily balance of $1,000 to obtain the disclosed annual percentage yield. The minimum deposit required to open a Senior Jumbo Share Certificate is $100,000. You must maintain a minimum daily balance of $100,000 in this account to obtain the disclosed annual percentage yield. To qualify for a Senior Certificate, you must be at least 55 years old.

Jumbo Share Certificate: The minimum required opening deposit is $100,000. You must maintain a minimum daily balance of $100,000 to obtain the disclosed annual percentage yield.

IRA Share Certificate: The minimum required opening deposit is $500. You must maintain a minimum daily balance of $500 in your account to obtain the disclosed annual percentage yield.

Balance Computation

Savings (Share), Holiday, Health Savings, and Checking (Share Draft) Accounts: Dividends are calculated by the average daily balance method which applies a periodic rate to the average daily balance in the account for the period. The average daily balance is calculated by adding the balance in the account for each day-end of the period and dividing that figure by the number of days in the period.

Money Market, Share Certificate, Senior Share Certificate, Senior Jumbo Share Certificate, Jumbo Share Certificate, and all IRA Share Certificate Accounts: Dividends are calculated by the daily balance method which applies a periodic rate to the balance in the account each day-end.

Transaction Limitations

Savings (Share) Account: Per "Regulation D", during any statement period, you may not make more than six (6) withdrawals or transfers from this account to another credit union account of yours or to a third party by means of a pre-authorized or automatic transfer or telephonic order or instruction. Additional transfers must be made in person, by written authorization, or at a participating ATM.

Holiday Account: Deposits to this account will be accepted, and early withdrawals are permitted subject to a fee. At maturity (the first week of November), the entire account balance, including dividends, will be disbursed to your LAFCU Savings or Checking account. Withdrawals made between November 1 through December 25 will not be subject to the Holiday Account early withdrawal fee.

Health Savings Account (HSA): You must have funds in your HSA to withdraw funds. An HSA is not eligible for Courtesy Pay privileges. HSA may not be used as overdraft protection and cannot be used as collateral for any loans. The HSA owner is solely responsible for making sure that all HSA contributions are within the limits set by the tax laws and that the aggregate contribution per tax year will not exceed the maximum amount allowed by the IRS.

Checking (Share Draft) Account: You must have funds in your Checking account or have Personaline overdraft protection before you write a check. An excessive number of checks returned on your Checking account for any reason may result in LAFCU closing your Checking account without further notice. Once a Checking account is closed due to returned checks, you may no longer be eligible for Checking account privileges at LAFCU.

Money Market Account: During any statement period, you may not make more than six (6) withdrawals or transfers from this account to another credit union account of yours or to a third party by means of a pre-authorized or automatic transfer or telephonic order or instruction. Additional transfers must be made in person, or by written authorization.

Share Certificates (Regular, Jumbo, Senior, Senior Jumbo): Share Certificates opened/renewed on or after October 1, 2005, with the term of 12 months or less: (1) you may make one deposit (without penalty), not to exceed $10,000... or the amount of your opening balance if it was less than $10,000; and (2) You may also make one withdrawal of principal (without penalty), not to exceed $10,000, as long as your minimum balance requirement is maintained. Other withdrawals of principal have substantial early withdrawal penalties. You may withdraw your dividends that have accrued since the opening of your certificate at any time without penalty. No deposits are allowed into certificates,with term over 12 months (except the "Starter" Certificate).

IRA Share Certificates: These certificates may not be used as collateral for a loan. Deposits are allowed at any time, and do not change the maturity date or dividend rate. IRAs are governed by federal tax laws. IRA withdrawals will be processed within federal guidelines, which could include substantial penalties.

Traditional & Roth IRA Share Certificates & Coverdell Education Savings Accounts: For these accounts with a term of 11 months or less, members age 59 and a half and over may complete a withdrawal distribution as long as the minimum balance is maintained. Transfer withdrawals and closures are subject to credit union penalty and transfer fee. For any other term, members under age 70 and a half are subject to credit union penalty and transfer fee. Members age 70 and a half and over may complete a withdrawal distribution at any time with no credit union penalty. Transfer withdrawals and/or closures are subject to credit union penalty and transfer fee.

Early Withdrawal Penalties

If your Regular Share, Senior Share, Senior Jumbo Share, or Jumbo Share Certificate Account has an original maturity of one year or less, the penalty is the loss of 90-calendar day's dividends. If your account has an original maturity of longer than one year, the penalty is the loss of 180-calendar day's dividends. The amount of the penalty may be deducted from the principal amount of the certificate if the dividends are not sufficient to cover the penalty. This may result in a reduction of principal.

Waiver of Penalties

For your Regular Share, Senior Share, Senior Jumbo Share, Jumbo Share Certificate Accounts, the penalties will be waived if the withdrawal is made as a result of the death of the member-owner of the certificate account.

Renewal Policies

For your Regular Share, Senior Share, Senior Jumbo Share, Jumbo Share Certificate Accounts, there is a 10 calendar day grace period in which to make changes to your certificate. LAFCU will send you a notice 30 calendar days prior to the maturity of your certificate. Upon maturity, the certificate will automatically renew with the same terms and the dividend rate and annual percentage yield in effect at that time unless: Written instructions for other disposition of funds is received by LAFCU no later than 10 calendar days before certificate maturity; OR The LAFCU Board of Directors determines not to renew certificates upon maturity in which case the funds will be deposited into your Savings account. IRA Share Certificates will be handled according to federal regulations.

Truth in Savings Act (TISA)

The Truth in Savings Act (TISA) is a federal law that affects savings-related accounts. It was enacted in 1993 to help consumers by mandating a uniform method of dividend (or for banks, interest) calculation and disclosure of account terms and conditions. LAFCU complies with this law by proving complete TISA information when a member opens an account affected by the TISA. In summary, the law requires financial institutions to:

  • Use daily balance or average daily balance method as a basis to calculate account dividends (or for banks, account interest).
  • Use a designated dividend calculation formula.
  • Provide full disclosure of dividend rates, Annual Percentage Yields, and other terms and conditions for savings-related accounts to new or potential members, or upon request from a member or potential member.
  • Provide specific information on members' statements such as the actual percentage earned on an account (known as the Annual Percentage Yield Earned, or APYE).
  • Provide specific disclosure information when advertising account rates and terms.

How Does the TISA Affect LAFCU?

To comply with the Truth in Savings Act, LAFCU upgraded its computer system. As a result, the following forms were revised:

  • Share Certificate (provided to members when they open a certificate account)
  • Share Certificate Renewal Form (mailed to members a minimum of 30 days prior to certificate maturity).
  • Statements (Annual Percentage Yield Earned is shown instead of the dividend rate)
  • The "Master Agreements & Disclosures" booklet and the "Rates & Fees" brochure are provided to new members. LAFCU is required to quote the Annual Percentage Yield for savings accounts when a member verbally requests the information.

Truth in Savings Act: Questions and Answers

1. What is the purpose of TISA?: To help consumers in comparing accounts. TISA requires that dividends (or interest for banks) be calculated uniformly among institutions: Daily Balance vs. Average Daily Balance, and a specific formula must be used for calculation of Annual Percentage Yield/Annual Percentage Yield Earned.

2. What is daily balance vs. average daily balance dividend calculation method? Daily balance means that a daily periodic rate is applied to the balance in the account each day, provided the account meets the minimum balance requirement each day. If the minimum daily balance requirement is not met, a dividend is not earned for that day. The formula is the dividend rate divided by 365 days.

The average daily balance is calculated by adding each day-end balance in the dividend period together and dividing by the number of days in the dividend period. If the account does not meet the average daily balance requirement for the dividend period, dividends are not earned for that period. With the formula, the Average daily balance means that a periodic rate = the dividend rate multiplied by the average daily balance multiplied by 365 (the number of days in the dividend period).

3. What is APY/APYE? How do they relate to the dividend rate? Dividend rates are listed in the LAFCU "Rates & Fees" brochure, and on our website. It is the initial percentage rate for an account, and does not reflect the effects of earnings compounding on the account.

The Annual Percentage Yield (APY) is a point of comparison and is based on the dividend rate. The APY is also in the Rates & Fees brochure and our website. The APY is how much you would earn on an account if the minimum balance required to earn the dividend was maintained, and all dividends earned were left on deposit in the account for one year. The APY assumes the dividend rate will remain constant. The APY is used to forecast earnings on the account. If you know the dividend rate, you can calculate the APY and the dollar amount of dividends an account would earn.

The Annual Percentage Yield Earned (APYE) is the actual percentage the account earned. It only appears on the member's statements. The APYE is affected by: days in the dividend period, account activity (withdrawals, deposits, crediting and compounding of dividends), and changes in the dividend rate.

4. When does TISA require LAFCU to provide disclosures?: LAFCU must provide in writing, in a clear and conspicuous manner: disclosures (in the "Master Agreements & Disclosures" and "Rates & Fees" brochure) are given to members or potential members before an account is opened or a service is provided, whichever is earlier, and disclosures are given upon request to a member or potential member.

5. What information must be in the disclosure? Rate Information (with APY and dividend rate) account designation (fixed or variable). For variable rate accounts: dividend and APY may change, how the dividend is determined, frequency of dividend change, and any limit on amount of change (N/A). Compounding and crediting: Frequency of dividend compounding/crediting and dividend period, and effects of closing an account. Balance information. Minimum balance required to open an account to avoid the imposition of a fee or to obtain the disclosed APY, and how the balance is determined for the above. Balance computation method. Average daily balance or daily balance. When dividends begin to accrue. Fees: Any fees imposed in connection to the account, and conditions of when fees will be imposed. Transaction limitations. Any limitations on the number or dollar amount of withdrawals or deposits. Additional information is required for Share Certificates: time requirements or maturity date, early withdrawal penalties, effects of withdrawing dividends before maturity, and renewal policies.

6. How will LAFCU provide the information? For verbal inquiries on dividend rates: LAFCU representatives will quote the APY and dividend rates. When opening an account: LAFCU will provide a "Master Agreements & Disclosures" and "Rates & Fees" brochure before the account is opened or a service is provided. If the member opens the account by mail, or is not present at account opening, LAFCU must mail or deliver a disclosure within 20 calendar days after the account is opened. Upon request: LAFCU will provide a "Master Agreements & Disclosures" and "Rates & Fees" brochure to members who requests account information. LAFCU will also offer the information even if it's not requested.