Future Payment Fund
Do you find your excess cash earns a low rate of return - if any at all - due to your need to keep these funds available for use in your operation? To avoid potential losses, Farm Credit West has established the Future Payment Fund Program for our customers in an ongoing effort to maximize your benefits. Through setting up a Future Payment Fund account, you can have the best of both worlds- keeping your cash liquid while also earning a market rate of return. Read more about this program below.
An initial minimum of $5,000 is required to open a Future Payment Fund account. Your maximum balances are limited by the amount of your total loans and leases with Farm Credit West.
You can set up an interest-bearing Future Payment Fund when you establish a Farm Credit West loan or lease, or at any time after your loan or lease is in place. However, Farm Credit West reserves the right to limit participation in the Future Payment Fund Program.
What interest rate will my FPF account earn?
Your Future Payment Fund earns interest at a rate determined by Farm Credit West. The rate typically changes with other market-based interest rates. The interest rate on your Future Payment Fund account may change as frequently as the first of each month. The interest rate during any calendar month is established by Farm Credit West before that month begins. Your Future Payment Funds cannot earn interest at a rate higher than your loan’s interest rate.
Interest accrues daily on your Future Payment Fund principal and is compounded monthly. Interest earned is subject to the same withdrawal requirements as Future Payment Fund principal.
As of March 2018, the current dividend rate is 1.40%. Rate history and current rate information may be obtained from your local Farm Credit West office.
When can I withdraw from a FPF?You may withdraw funds from a Future Payment Fund account to apply against Farm Credit West loans, to pay other agricultural obligations, or for any purpose consistent with your borrowings from Farm Credit West. Requests for withdrawals for other purposes are subject to Association approval.
How are my transactions processed?You can choose to add or withdraw from your Future Payment Fund using the electronic features of online banking. You can also move funds between your depository bank and Farm Credit West via electronic transfer or by phoning your local branch office.
How safe are the funds in my FPF account?The Future Payment Fund Program is voluntary and these funds are uninsured. Your funds are protected by the commitment and financial condition of Farm Credit West. Copies of the most recent reports reflecting the Association’s financial condition are available in each Farm Credit West office.
Will I be notified of changes?The specific terms and conditions of the program are contained in the Future Payment Fund Agreement. From time to time, Farm Credit West may review program parameters. Terms and conditions of the program may be changed with advance notification to participating customers.
ReportingThe Association will comply with applicable reporting requirements of federal income tax laws. Interest earned on your Future Payment Fund is reported annually to you and to the Internal Revenue Service on Form 1099-I. Consult your tax specialist regarding the taxability of this income by the state.