The best credit union CD rates can outpace those at banks. Because credit unions are not-for-profit institutions, they can offer higher savings rates than banks because their earnings are not going to shareholders. These institutions also don’t have as many regulatory requirements as banks do, which allows them to offer even better interest rates on savings accounts.
To get the best rates on certificates of deposit, it’s important to shop around. There are a variety of terms to choose from and each institution has different minimum deposit requirements. Aside from that, it’s important to consider the annual percentage yield (APY) and other conditions that are attached to each certificate.
In July, several big online banks Credit Union CD Rates Hillsboro raised their 1-year CD rates to a range of 5% and above. These increases had a positive impact on the Rate Index, which maps the average yields of one-year CDs from ten well-established online banks. The Index rose 21 bps, which is the largest increase in this year and a significant improvement over the past three months combined.
While the cheapest CD rates tend to be found at local and regional brick-and-mortar banks, some credit unions offer competitive rates on time deposits as well. These not-for-profit institutions are a good choice for savers who want to earn the highest returns on their money. Unlike banks, which operate for profit and function like lenders, credit unions are owned by their members and they pay out dividends to investors instead of lending funds to the general public.
Although both banks and credit unions offer CDs, the latter often have more generous terms than those at banks. These include higher interest rates and a longer grace period before you must start paying a penalty for withdrawing funds early. These factors can make a credit union share certificate an attractive option for investors who don’t mind locking their money up for a set amount of time.
Another benefit of credit union CDs is that they are usually insured by the National Credit Union Administration (NCUA), which provides federal insurance for these types of investments. By comparison, most banks are insured by the Federal Deposit Insurance Corporation (FDIC) for deposits up to $250,000.
Before opening a CD at any institution, be sure you’re eligible to join. Some credit unions restrict membership based on geography, employer or other affiliations. To avoid getting a headache later, check out our list of the top credit unions with the best CD rates before you start shopping for a time-based account. Then, compare those rates to those offered by banks and other financial institutions. This can help you find the right fit for your savings goals.