Credit Union CD Rates

If you are looking to purchase CDs (Certificates of Deposit) as an investment, you have probably been advised to join a credit union in order to get the best returns on your investment. This is actually sound advice on several levels. The first thing you would want to know is what the difference is between buying CDs at a credit union as opposed to the bank you have been doing business with for years. Secondly, you will need to understand the rates offered by credit unions along with how to choose the best credit union CD rates based on how interest is compounded. Finally, once you know what you are looking for in credit union CDs you will need to know how to look for a credit union to buy those CDs from!

Credit Union CD Rates vs. Bank CD Rates
Historically, credit unions offer better rates than banks all the way around. Not only do they offer higher yields on CDs and savings accounts but they charge lower rates on loans as well. At the moment, the current interest rate on CDs offered by banks is approximately 1.2% while credit unions around the country are offering substantially more than that. Based on the latest statistical analysis, you can expect at least 30% more interest on a credit union CD than what the leading banks are offering.

Why Credit Unions Offer Better Rates
It is easy to understand why credit unions can offer better interest on investment and savings products while extending loans with lower finance charges. Keep in mind that credit unions are not-for-profit financial institutions wholly owned by their members. As a result, any profits realized throughout the year are divided up and passed on to the members at the end of the fiscal year. Not only do you get better rates on those CDs but you are also paid dividends annually at the end of a good year.

Look at How Interest is Compounded
If you don’t already belong to a credit union and are looking for one to join in order to get those good rates, the first thing you will need to look for is how they compound interest on CDs. Some credit unions will compound interest on CDs quarterly while others compound it more frequently. You want to find one that compounds interest as frequently as possible because this will provide the highest annual yield. (Remember, compounding interest on top of interest helps build it up more quickly!)

Where to Find the Best Credit Union CD Rates
There are actually a couple of good ways to find the best credit union CD rates in your area. The first and probably most expedient route to take would be to do an internet search. Most often the search engine you use will ask for your zip code and after searching through a database will provide several to choose from. These search engines will also provide current interest rates being offered. Although you might not meet the criteria for joining the first one or two on the top of the list, some credit unions have open membership. (For example, credit unions organized for public school employees within a given county may only be open to public school personnel.)

Once you have found a credit union that offers higher rates on CDs than your bank, also take the time to see what other types of incentives they have to offer. You just might be surprised that the best credit union CD rates might not be the only perk you will receive! They might have lower interest rates on home and auto loans while also providing higher yields on savings and certain checking accounts as well.

When looking at past performance, credit unions have a good record of higher CD and even savings interest rates. The first step is to join a credit union. These financial institutions are owned by members who make decisions by vote. The whole idea is to give more power to the credit union client and offer higher rates on accounts and investments whenever possible.

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