I am very sad to report that NC State Employees Credit Union is shutting down their bridge account program. Originally started in 2007, the account offered a relatively risk-free way to play the markets. It was great while it lasted. To quote myself:
The interest rate on this account is variable and pays quarterly. It varies with the movement of the S&P 500 fund. If the S&P 500 is up for the quarter you receive that return (up to 3%). This may not seem like much, but it translates to a 12.00%APR/12.55%APY. Not bad given current money market and CD rates.
But Slug, what happens if the S&P 500 has another quarter like this last one where it fell almost 10%? Nothing happens. That’s right, your money just sits there and loses no value. You gain no interest, but in exchange you aren’t exposed to any downside in the market.
Their stated reasoning for closing the accounts is because the credit union investment services has lowered the amount needed to open an investment account from $3,000 to $250. Thus, there is no need to "bridge" their members from deposit accounts to the investment accounts since the threshold is so low. I'm not sure I buy this though. There is a financial hurdle to investment accounts that is obviated, but the psychological hurdle is still present and bridging that may prove to a bigger problem now that the relatively risk-free bridge account is gone.
Historical returns were really quite solid. I will certainly miss this small part of my portfolio. For those of you still with accounts, you can keep them until January 2012 when the funds from your bridge account will be placed into the deposit account you designated when you opened the bridge account. I intend to keep my until the end.