Credit unions are nonprofit financial institutions that have a primary goal of offering better loan and deposit rates to their members. Unlike banks that focus on profit and shareholders, the profits that credit unions make are used to help their communities. One way they do this is by offering competitive CD rates, which are higher than those offered by local banks. In addition to providing high CD rates, the best credit unions also offer a variety of term lengths and other features that can maximize your yield.
A certificate of deposit (CD) is a contract-based savings vehicle that gives you a fixed rate of return over a certain period of time. The longer the term of the CD, the higher your interest earnings. While you can withdraw funds from a CD before its maturity, the penalty for doing so is usually substantial. In order to avoid this, you should only invest in CDs for periods of time that you are unable to risk losing.
The interest on a CD is typically paid at regular intervals and will be reflected on your monthly statement. However, the frequency of these payments can vary by bank. Some banks will pay interest on a CD every month, while others will only distribute it quarterly or at the end of the term. You should carefully consider these options before opening a CD account.
Some credit unions offer a variety of CD terms and APYs, making it easy to find the right solution for your needs. America First Credit Union, for example, offers a number of different CDs that range in length from three to 60 months and earn competitive rates. This includes traditional CDs, individual retirement account (IRA) CDs, and bump-rate CDs. In addition to offering great rates on CDs, America First also offers high-yielding money market accounts.
Other top credit unions that offer competitive CD rates include Citizens Access, First Internet Bank of Indiana, and First Internet Credit Union. Citizens Access has CDs with terms ranging from one year to five years and offers highly competitive APYs. Its CDs require a minimum deposit of $5,000, and it also offers jumbo versions with slightly higher rates. First Internet Bank of Indiana also offers CDs with various terms and a manageable minimum deposit requirement.
As an added bonus, many of these top CD rates from credit unions are insured by the National Credit Union CD Rates Hillsboro Administration (NCUA) up to $250,000 per depositor. This means that you can feel confident that your savings are safe in these institutions, as they are just as secure as the FDIC and NCUA insured banks in which most people hold their money. In comparison, the money in a typical bank money market account is only insured by the Federal Reserve up to $250,000. If you want the security of knowing that your savings are insured, then you should choose a CD from a top-rated credit union. You should also keep in mind that while the higher APYs on CDs are tempting, you will not be able to get access to your funds without paying a substantial penalty.