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 you’ve even heard that credit union CD rates offer higher returns—but is that really the case?
On average, yes. As of September 2017, the average one-year credit union CD had a 0.63% annual percentage yield (APY), compared to the 0.51% APY average among one-year bank CDs. (You may also want to view our picks for the overall best CD rates.)
Using data from DepositAccounts.com, another LendingTree company, we identified the top one-year credit union CD rates, as of Jan. 5, 2018. 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.
Best CD rates for credit unions with no cost to join
The thing about credit unions is that they’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 Financial Credit Union - 1-Year Share Certificate, 1.00% APY, min. deposit $1,000
NASA Federal Credit Union - 1-Year Share Certificate, 0.65% APY, min. deposit $1,000
If you do need to make an early withdrawal, you will face a penalty of 180 days’ worth of interest.
Best credit union CD rates with restricted memberships or membership fees
Each of these credit unions have restricted membership criteria, but don’t let that scare you away. If you don’t meet their membership criteria, it’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.
USAlliance Financial – 12 Month CD, 1.87% APY, min. deposit $500
Once you’re a member of USAlliance Financial, you can open a 12-month CD with a minimum of $500. Their early withdrawal penalty equals 180 days’ worth of interest earned on the amount you withdraw.
CapEd Credit Union – 12 Month CD, 1.75% APY, min. deposit $250
CapEd Credit Union supports teachers in the state of Idaho, but they don’t just serve teachers. Those who are willing to support education with a one-time $20 donation to the Idaho CapEd Foundation can become members of the credit union. Also, if you live in the state of Idaho and work for, volunteer with, or are retired from the industry of education, you are qualified for membership.
After becoming a member of CapEd Credit Union, you may open a 12 month CD with a minimum deposit of $250. Just make sure that you can afford to keep your money in the CD for one year because the early withdrawal penalty is 90 days’ worth of interest.
PenFed Credit Union – 1-Year Money Market Certificate, 1.61% APY, min. deposit $1,000
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 don’t qualify through those criteria, getting a membership to this credit union is not difficult if you’re willing to pay a one-time fee of $17 to either Voices for America’s Troops or the National Military Family Association.
Alliant Credit Union – 12-17 Month Share CD, 1.60% APY, min. deposit $1,000
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.
Air Force Federal Credit Union – 1-Year Certificate, 1.56% APY, min. deposit $1,000
This credit union comes in first place overall for highest interest rates for 12-month CDs. You can earn $15.60 by depositing a minimum of $1,000 in a 12-month CD, with an APY of 1.56%. You can also use your CD as collateral to earn a lower interest rate on a loan, and membership comes with a host of discounts for parks and businesses in the San Antonio, Texas area. Watch out for the early withdrawal penalties, however, worth half of whatever you would have earned between when you withdrew the funds and when it would have matured.
Best CD rates for credit unions with the best mobile apps
By their very nature, CDs aren’t something that require constant attention, poking, and prodding. It’s a set-it-and-forget-it kind of a deal, so you won’t need any spiffy banking apps to use CDs.
But, if you’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 you’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 MagnifyMoney’s 2017 mobile banking app analysis.
Wright-Patt Credit Union - 1-Year Certificate, 2.16% APY, min. deposit $500
You can earn $10.80 on a 12-month CD with just a relatively small $500 deposit. Early withdrawal penalties vary depending on the original term of your CD, however they’ll be anywhere between 5-12 months’ worth of dividends.
Redstone Federal Credit Union – 12 Month MemberPlus Regular Share Certificate, 1.61% APY, min. deposit $1,000
However, if you do qualify for membership, you could earn an APY of 1.61% with a minimum deposit of $1,000. This could earn you an additional $16.10 at the end of the 12 month term. 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 - 1-Year Investment Certificate, 1.40% APY, min. deposit $1,000
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 1.40% on a 12-month CD. With a minimum deposit of $1,000, that translates into earnings of $14.00 after one year. If you withdraw your money before the CD matures, you’ll owe a penalty fee of anywhere between seven days’ worth of dividend earnings or all of your dividend earnings.
Delta Community Credit Union – 1-Year Certificate, 1.00% APY, min. deposit $1,000
Delta Community CU used to be the lowest-earning credit union on our list, but recently increased the APY on this product from 0.75% to 1.50%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.
3 questions to consider before opening a credit union 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), as of September 2017. That’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 “backed by the full faith and credit of United States Government, so it's pretty solid.”
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? Here’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 you’re opening a CD with a bank. You can’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 you’re likely to come across at a bank or credit union, they still don’t really earn great interest. If you’re investing for the long-term (like retirement savings), your money is better invested in the riskier (but higher-earning) stock or bond market.