Certificates of deposit (CDs) are a great way to safely store your savings at a financial institution, as they offer a guaranteed rate of return, and CD rates tend to be higher than those on traditional savings accounts. Maybe youâ€™ve even heard that credit union CD rates offer higher returnsâ€”but is that really the case?
On average, yes. As of September 2018, the average one-year credit union CD had a 1.10% annual percentage yield (APY), compared to the 0.87% APY average among one-year bank CDs.
Using data from DepositAccounts.com, another LendingTree company, we identified the top one-year credit union CD rates, as of January 7, 2019. We then eliminated any credit union with a health rating lower than a B and identified the top three offerings in three categories: restricted, no cost, and best banking app. If there was a tie by APY, we went with the product with the lower minimum deposit. Here are the best one-year credit union CD rates.
The thing about credit unions is that theyâ€™re not usually just open to anyone. You usually need to meet some membership criteria in order to get in and get access to all of their really nice products. These credit unions, however, will let you in for free regardless of your personal details. (Note: Only two credit unions met our criteria for this list.)
Unify FCU offers the highest interest rates on CDs (which it calls share certificates) of any credit union with no cost to join. The interest rate on their 12-month CD, for example, is 1.75%, compared to the national average of 0.92% in June. You would earn $17.50 on a $1,000 deposit. If you withdraw your money early, however, youâ€™ll face a penalty of 90 daysâ€™ worth of interest.
If the rigid inflexibility of CDs makes you leery, NASA FCU might be your best bet. They have a lot of flexible certificates, such as add-on certificates that let you start with as little as $250, and bump-rate certificates that let you opt for a one-time interest rate increase if rates go up. You can even take out a loan from your certificate should you need the cash before itâ€™s matured. You can join NASA FCU with a complimentary membership to the National Space Society.
If you do need to make an early withdrawal, you will face a penalty of 180 daysâ€™ worth of interest.
Each of these credit unions have restricted membership criteria, but donâ€™t let that scare you away. If you donâ€™t meet their membership criteria, itâ€™s possible to make a small donation to their charity of choice in order to become eligible for membership. Furthermore, these credit union CD rates offer some of the highest-returning share certificates out of any category.
Membership to USAlliance Financial is open to anyone who lives, works or worships in certain counties of Massachusetts, the city of West Haven, Conn., and a few districts in New York. However, if you donâ€™t qualify by location, you can qualify by giving USAlliance authorization to make you a member of various organizations, including the American Consumer Council, if you arenâ€™t already a member of these organizations. Keep in mind that these organizations may request fees.
Once youâ€™re a member of USAlliance Financial, you can open a 12-month CD with a great rate of 2.80% by depositing a minimum of $500. Their early withdrawal penalty equals 180 daysâ€™ worth of interest earned on the amount you withdraw.
Membership to Partner Colorado Credit Union is open to anyone willing to donate $5 to the Partner Colorado Foundation. The credit union will help you make the donation when youâ€™re ready to open an account. You may want to first find out if youâ€™re eligible through the other fields of membership prior to opening an account.
Once youâ€™re a member of Partner Colorado Credit Union, you can open the 12-month CD Special with a minimum of $500. Their early withdrawal penalty is 90 days interest.
on Partner Colorado Credit Unionâ€™s secure website
PenFed has an outstanding APY of 2.80%. With a minimum deposit of $1,000, you could earn $24.50 in one year. Interest is compounded daily and posts to accounts monthly. However, be aware of the steep early withdrawal penalty. If you withdraw funds before the year is up, you may forfeit all interest accrued up to that point.
Eligibility for this credit union is mainly based on military status, governmental employment status, affiliation with certain associations and organizations or relation to eligible members. However, if you donâ€™t qualify through those criteria, getting a membership to this credit union is not difficult if youâ€™re willing to pay a one-time fee of $17 to either Voices for Americaâ€™s Troops or the National Military Family Association.
With a $5 donation to the Connexus Association, anyone can join Connexus Credit Union. The Connexus Association assists educational institutions by providing scholarships and financial information. Once you become a member of the credit union, youâ€™ll be able to open their 12 month CD with a $5,000 deposit.
If youâ€™re able to deposit $5,000 into Connexusâ€™s 12 month CD, youâ€™ll earn $140 by the end of the term. However, if you withdraw funds early, youâ€™ll be penalized with 90 daysâ€™ worth of interest.
With a minimum deposit of $1,000, you could earn an APY of 2.65% on a 12-17 month CD. An early withdrawal penalty of 90 daysâ€™ worth of interest may be imposed if you withdraw funds prior to the CDâ€™s maturity date.
With a $10 donation to Foster Care to Success, you can easily become a member of Alliant Credit Union. You can also become a member if you are an employee or retiree of certain organizations, related to existing Alliant members, or live or work in qualifying communities.
By their very nature, CDs arenâ€™t something that require constant attention, poking, and prodding. Itâ€™s a set-it-and-forget-it kind of a deal, so you wonâ€™t need any spiffy banking apps to use CDs.
But, if youâ€™d like to switch all of your banking to the same institution that holds your CDs, it might be a wise idea to consider one of these credit unions if youâ€™re a digital junkie. Most credit unions lag behind their bank compatriots in terms of mobile banking apps, but these credit unions offer top-notch mobile apps, according to MagnifyMoneyâ€™s 2017 mobile banking app analysis.
You canâ€™t just make a simple donation to join to Redstone Federal Credit Union if you fail to meet their membership criteria. You need to be a government employee or contractor, a member of the military, reserve, or National Guard, or affiliated with a number of organizations listed on their website among other options.
However, if you do qualify for membership, you could earn an APY of 2.16% with a minimum deposit of $1,000. Redstone FCU has compounding and non-compounding certificates, which allow you to have the option to withdraw interest earned or not throughout the term of the certificate.
Eastman Credit Union also has pretty restrictive membership requirements. Youâ€™ll have to be an employee (or a family member of an employee) of one of their select employers, or live in certain parts of Tennessee, Texas, or Virginia.
Eastman CU is another one of the rare credit unions that allow you to withdraw your dividends penalty-free before the maturity date, although again, doing so will lower your total returns. Currently, you can earn an interest rate of 2.00% on a 12-month CD with a minimum deposit of $1,000. If you withdraw your money before the CD matures, youâ€™ll owe a penalty fee of anywhere between seven daysâ€™ worth of dividend earnings or all of your dividend earnings.
Unlike many credit unions, you canâ€™t just make a simple donation to join Wright-Patt CU if you fail to meet their membership criteria. You need to live in certain areas of Ohio, be associated with Wright-Patterson Air Force Base, or be an employee of their select employer group, among other options.
You can earn $8.80 on a 12-month CD with just a relatively small $500 deposit. However, if youâ€™re able to deposit $100,000 or more, youâ€™ll earn an APY of 2.07%, which will return $1,870 in interest. Early withdrawal penalties vary depending on the original term of your CD, however theyâ€™ll be anywhere between 5-12 monthsâ€™ worth of dividends.
There are many ways to join Delta Community CU, such as living in certain parts of Georgia, being a member of one of their select employers, or being a member of one of their partner organizations. Interestingly, citizens of many countries like Argentina, France, and Peru are also eligible to join.
Delta Community CU used to be the lowest-earning credit union on our list, but recently increased the APY on this product from 1.10% to 1.60%. The early withdrawal penalty is 90 daysâ€™ worth of interest on a 12-month CD.
Banks are more likely to call their products certificates of deposit, while credit unions often refer to them as share certificates. Aside from the name, the biggest difference between the two is that credit unions have higher average annual percentage yields (APYs) than traditional banks, as of September 2018. Thatâ€™s good news: It means more money back in your pocket when the CD matures (i.e., reaches the end of its term and is available for withdrawal).
There really is no difference in safety between depositing money in a CD with a credit union versus a bank, as long as they participate in either the National Credit Union Administration (NCUA) for credit unions, or the Federal Deposit Insurance Corporation (FDIC) for banks.
According to Neal Frankle, a Los Angeles-based Certified Financial Planner with Wealth Pilgrim, deposits of up to $250,000 per financial institution are â€śbacked by the full faith and credit of United States Government, so itâ€™s pretty solid.â€ť
For the most part, choosing a CD at a bank or a credit union boils down to your preference as a consumer: Do you want to be a bank customer or a member of a credit union? Hereâ€™s a primer on the differences.
The biggest advantage of credit union CDs over bank CDs is that you can likely earn more interest. But with both products, the longer the CD term, the more interest you will earn. And with a CD laddering strategy, you can have the best of both worlds: frequent access to your money, yet you can still keep it locked away in high-interest, long-term CDs.
Beyond that, the disadvantages of opening a credit union CD are the same as if youâ€™re opening a CD with a bank. You canâ€™t access that money without paying an early withdrawal penalty until the CD matures. While CDs do offer some of the highest rates for any financial product youâ€™re likely to come across at a bank or credit union, they still donâ€™t really earn great interest. If youâ€™re investing for the long-term (like retirement savings), your money is better invested in the riskier (but higher-earning) stock or bond market.