Caution - Alabama Credit Union (Especially OOS Families)

ChicagoBear
Tue, 05 Aug 2014 22:18:37 +0000

In other threads I have been an advocate of opening an account at the Alabama Credit Union - which has had, and soon will have a remodeled branch at the Ferg. It is very convenient for students, accounts are free (except for the one time $1.00 new relationship fee) and eliminates nuisance ATM fees. However, I have just had to deal with their “policy” concerning holds on deposited checks - unfortunately, their policy does not appear to comply with The Federal Reserve Board’s Regulation CC which applies to all banks and credit unions.

On Friday, just before I had to leave for BHM, I went to deposit a $600 check to my DD’s and my joint account and was told they would be holding the check for 7 days. I asked why, they said:


Your account is new (Wrong - federal regulations state that any extra new account holds are only allowed the first 30 days of a new account;
This is a large check (Not Quite - federal regulations allow banks to issue case-by-case holds only if more than $5,000 is deposited on a single business day);
This is an out of state check (Yes, but federal regulations specifically prohibit a determination about “reason to doubt collectibility” based upon a class of checks - such as out of state)
The check is more than your balance (Yes, but that is not an acceptable “reason to doubt collectibility” as defined in the regulaton below);


The Federal Reserve has indicated that acceptable “reasons to doubt collectibility” are:


The paying bank has informed the deposit bank that check was not paid
The bank has received notice from the paying bank prior to presentment that check will not be paid - such as a stop payment has been issued
The check is post-dated or stale dated
The bank has received confidential information to cause reasonable belief the check will not be paid. The examples given are the depositer is engaged in check kiting, the pending insolvency of the drawer or the pending insolvency of the drawee bank


Not having the Code of Federal Regulations with me in T-Town, and having to get to the airport, they placed a hold on the deposit. I called today and complained. After being on hold for 5 minutes, they agreed “this one time” to make the funds available (the check posted to my checking account in Chicago yesterday) but insisted they have the right to hold any checks they wanted for 7 days even after I quoted the applicable regulations.

As you might have guessed, I work in bank compliance, so I know how to stand up for my rights. Also my DD has her main debit card with one the largest banks in the country that definitely follows the Reg CC rules - so even if she had to “wait out the hold”, it would make no difference. I’m just upset that for some reason, their regulator (NCUA) isn’t apparently enforcing the Federal Reserve’s regulation the way the Federal Reserve enforces it on “real” banks. I also wanted OOS parents to be aware of this situation if you use the credit union. The convenience of the credit union is real, but these “extra-regulatory policies”, if this is the only account your student has, could severly impact your kid. Remember 7 business days is at least nine calendar days. If you decide to use the credit union, you may need to only make cash or electronic deposits.