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Best of, Earning Interest

The Best IRA CD Rates – September 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Top IRA CD rates
Source: iStock

Perhaps you’ve decided to build a CD ladder within your IRA, or maybe you’re looking for a safe way to store your retirement cash for a specific period of time. Whatever the reason, you’re interested in getting an IRA CD and, understandably, want to know what products will give you the best rate of return.

You can get an IRA CD with terms ranging from three months to more than six years, with interest rates generally increasing with the term length. There are lots of options, so we’ve rounded up the top IRA CD rates that are available right now for a variety of terms. You’ll select your IRA CD terms based on your CD-ladder master plan or whenever you’ll need access to your money.

Every month, we choose the best IRA CD rates using data from another LendingTree company DepositAccounts.com, a database of offerings at more than 17,100 banks and credit unions. We sorted the products by APY, then eliminated institutions with a health rating below a B. We then eliminated products that are not available nationwide. From there, we chose the IRA CD with the highest APY among products with a minimum deposit no greater than $5,000. Here are the best options.

The best IRA rates in September 2019

Term

Institution

APY

Minimum Deposit Amount

3 months

TIAA Bank

1.95%

$5,000

6 months

CommunityWide Federal Credit Union

2.35%

$2,000

12 months

State Department Federal Credit Union

2.63%

$500

18 months

Capital One

1.90%

$0

2 years

MAC Federal Credit Union

2.80%

$1,000

3 years

Hughes Federal Credit Union

3.10%

$1,000

4 years

State Department Federal Credit Union

2.93%

$500

5 years

State Department Federal Credit Union

3.19%

$500

6+ years

Evansville Teachers FCU

2.50%

$1,000

 

Best 3-month IRA CD — TIAA Bank Yield Pledge IRA (Traditional, Roth)

3 Month Yield Pledge IRA from TIAA Bank
TIAA Bank offers customers a 3-month yield pledge CD that’s also eligible for IRA protection. Savers can expect an APY of 1.95%, with a minimum deposit of $5,000.

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on TIAA Bank’s secure website

Member FDIC

Best 6-month IRA CD — CommunityWide Federal Credit Union (Traditional, Roth)

6 Month IRA from Communitywide Federal Credit Union
CommunityWide Federal Credit Union is offering the highest rate available on 6-month IRA CDs at 2.35% APY for deposits of $1,000 and over. That translates into earnings of $11.71 if you were only to deposit the minimum amount. Compare that to the average of all regular 6-month CDs, at 0.91%.

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on Communitywide Federal Credit Union’s secure website

NCUA Insured

Best 1-year IRA CD — State Department Federal Credit Union (Traditional, Roth)

12 Month IRA Certificate from State Department Federal Credit UnionThis one-year term share certificate earns an APY of 2.63% and only requires a minimum deposit of $500. This is a significantly higher rate than the credit union’s traditional one-year share certificate, which earns an APY of 2.42%. If you deposited $1,000, that would earn you $26.30 by the time the account matured.

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on State Department Federal Credit Union’s secure website

NCUA Insured

Best 18-month IRA CD — Capital One 360 IRA CD (Traditional, Roth, CESA)

18 Month 360 IRA from Capital OneCapital One’s 18-month 360 IRA CD can earn you a competitive rate of 1.90% APY. There’s no minimum deposit to open a CD or start earning interest, although the penalty for making an early withdrawal is six months of interest — no matter when you redeem the account prior to maturity. As the online banking side of Capital One, Capital One 360 tends to offer higher rates than the bank’s conventional CDs.

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on Capital One’s secure website

Member FDIC

Best 2-year IRA CD — MAC Federal Credit Union (Traditional, Roth)

24 Month IRA from MAC Federal Credit Union Headquartered in Fairbanks, AK, MAC Federal Credit Union’s 2-year IRA share certificate earns 2.80% APY with a minimum deposit of $1,000. This IRA share certificate is available for a Traditional IRA or a Roth IRA. Membership in this credit union is open to anyone who joins the Polar Bear Chapter of the Association of the United States Army, which costs $40 for a two-year membership.

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on MAC Federal Credit Union’s secure website

NCUA Insured

Best 3-year IRA CD — Hughes Federal Credit Union (Traditional, Roth, SEP)

36 Month IRA from Hughes Federal Credit UnionThis credit union based in Arizona allows anyone in the country to qualify for membership provided they make a $10 donation to one of several associations, including Friends of the Oro Valley Public Library, Friends of the Pima County Public Library, Friends of Green Valley Library, and Friends of Kirk-Bear Canyon Library. The high APY and relatively low minimum deposit makes this IRA CD a great choice.

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on Hughes Federal Credit Union’s secure website

NCUA Insured

Best 4-year IRA CD — State Department Federal Credit Union (Traditional, Roth)

48 Month IRA Certificate from State Department Federal Credit Union State Department FCU continues to dominate the longer-term IRA CDs with its 48-month CD, boasting a rate of 2.93% APY. As with all State

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on State Department Federal Credit Union’s secure website

NCUA Insured

Best 5-year IRA CD — State Department Federal Credit Union (Traditional, Roth)

60 Month IRA Certificate from State Department Federal Credit UnionThe State Department FCU, a regular fixture of these lists, doesn’t disappoint with its 5-year IRA CD rates offering a high APY with a low minimum balance requirement of $500.

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on State Department Federal Credit Union’s secure website

NCUA Insured

Best 6-year IRA CD — Evansville Teachers FCU (Traditional, Roth, CESSA)

6 Year IRA from Evansville Teachers Federal Credit UnionTo join this credit union, you may make a $5 donation to the Mater Dei Friends & Alumni Association. You may want to strongly consider doing so, as the 6-year IRA CD rate offered by Evansville FCU is the best on the market in terms of APY. Plus, it only requires a minimum balance of $1,000.

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on Evansville Teachers Federal Credit Union’s secure website

NCUA Insured

3 questions to consider before opening an IRA CD

Opening an IRA CD generally requires filling out a form or talking to a banker. You’ll have to have a way to fund your IRA CD, whether that’s rolling over an existing retirement account into an IRA CD or depositing cash into the product. The same limits that apply to IRA contributions apply to IRA CDs: $5,500 per year ($6,500 if you’re over age 50) of your own money across all your IRA accounts each year, and you can do a rollover once per year.

Unless you’ve invested in a bump-up IRA CD, you won’t be able to take advantage of a higher rate until your CD matures. Withdrawing funds from an IRA CD before they mature will result in a stiff penalty. Bump-up IRA CDs give you a chance to increase your interest rate to a higher level if it’s available, but you’re generally only allowed to do this once or twice during the life of the CD.

You can either use the direct-transfer method or the indirect-transfer method. The direct transfer method requires setting up your new IRA account filling out a form authorizing the bank or credit union to transfer money from the old account into the new account. The indirect transfer method involves you asking for a check from your old IRA account. You have up to 60 days to deposit that check into your IRA CD to avoid incurring a penalty.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

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Earning Interest, Reviews

Discover Bank CD Rates Review

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Discover Bank
Most people know Discover as a credit card company, but it also operates an online bank and offers some of the best rates and terms on checking and savings accounts and certificates of deposit (CDs).

Savings account bonus offer: Earn up to $200 on your first Discover savings account

As a bank, Discover offers some of the best products on the market. Currently, they’re offering a major deal on their online savings account, which currently earns 1.90% APY. If you apply for their savings account for the very first time by 10/07/19 and deposit a balance of at least $15,000 by 10/21/19, you can earn a $150 bonus. If you deposit a balance of at least $25,000 by the same date, you can earn a $200 bonus. Applying for the account is easy as you don’t need to go to a branch. Bonuses will be credited to your account by 11/04/19. You can apply online or over the phone. Just be sure to enter or mention the promo code MM919 when you apply.

Learn More Secured

on Discover Bank’s secure website

Member FDIC

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If you’re looking for CDs in particular, Discover is currently considered to have some of the best CDs due to their customer service and digital tools.

Discover Bank CD rates

CD term

Annual Percentage Yield (APY)

3 months

0.35%

6 months

0.65%

9 months

0.70%

12 months

2.40%

18 months

2.40%

24 months

2.45%

30 months

2.45%

3 years

2.45%

4 years

2.45%

5 years

2.50%

7 years

2.55%

10 years

2.60%

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on Discover Bank’s secure website

Member FDIC

How do Discover Bank CD rates compare?

While Discover Bank CD rates aren’t always the highest available, they are consistently among the top offers across all terms. However, you may be able to find a similar or even better rate with a CD that has a lower minimum deposit than Discover’s $2,500 requirement. Currently, several nationwide banks offered a 12-month CD at a rate higher than Discover’s 12-month CD APY, while requiring a lower minimum deposit. For example, at the same time the above rates were available at Discover, there were 12-month CDs with rates as high as 2.25% APY with a lower minimum balance amount to earn the APY.

It’s always great to go for the highest interest rates possible, but keep your CD investing strategy in mind. If you’re investing in CDs using the ladder strategy, it might be easier to keep everything in one bank since you’ll be switching in and out of CDs frequently.

Discover also stands out from its competition in the CD space with its mobile app and 24/7 U.S.-based customer service. If you value such features, keep those particulars in mind when weighing Discover CD rates against others’.

What you need to know about Discover Bank’s CDs

Discover Bank is very transparent in terms of fine print. It’s not difficult to understand what’ll happen with your money after you invest it. We’ll cover the basics here about what you need to know to invest in Discover Bank’s CDs.

How to open a CD

It’s very simple to open up a CD with Discover Bank. Go to their CD webpage and click on the orange “Open an Account” button near the top right of the page. You can then choose which accounts you’d like to open. Select “CD,” choose a CD term and enter how much you’d like to deposit.

You’ll then need to complete the application by providing your name, address, date of birth, phone number, Social Security number, employment status and possibly even your driver’s license. Once your application is complete and accepted, you’ll need to fund the account.

How to fund the CD

You’ll need to fund it within 45 days of submitting your application, which you can do in one of three ways:

  • Transfer funds from another bank account over the phone. (You can only do this when you first fund your account.)
  • Transfer funds from another bank via online transfer.
  • Write a check to yourself and send it to the following address:Discover Bank
    P.O. Box 30417
    Salt Lake City, UT 84130

The minimum deposit amount for each of Discover Bank’s CDs is $2,500. Once you open a CD, you can’t deposit more money later, so it’s a good idea to make sure you have all the cash you want to invest before you open the account.

Withdrawing funds from the CD

When you want to withdraw money from your CD, the biggest thing to consider is whether that CD has matured yet, or finished its term.

If your CD has not matured, you’ve got options: You can take the interest out penalty-free at any time, or you can withdraw the principal (or the money you deposited) at any time as long as you pay an early-withdrawal penalty. This penalty varies depending on the original term of your CD:

  • less than one year: three months’ worth of simple interest
  • one year to less than four years: six months’ worth of simple interest
  • four years: nine months’ worth of simple interest
  • five years to less than seven years: 18 months’ worth of simple interest
  • seven years or longer: 24 months’ worth of simple interest

If your CD has finished its term, you can withdraw your money penalty-free, allow the CD to renew or roll it into a CD of a different term length. (More on that in a bit).

Earning interest on a Discover CD

Your CD will start earning interest on the same business day that you fund the account. The interest will be added to your account once each month, however.

When it comes to what to do with your interest, you have two options: The default option is to allow it to compound within the CD (meaning you’ll earn interest on that interest), or you can have it automatically deposited each month into another Discover bank account.

What happens once the CD matures?

You’ll get a heads-up notice about a month before your CD matures so you can decide what to do with the money. You have two main options: Either reinvest it into another CD (of the same term length or a different term length), or withdraw the money from the CD and put it into another account (such as a checking or savings account, or perhaps a CD at a different institution).

If you don’t let Discover know what you want to do with the maturing CD, the CD will automatically renew into another one of the same term length. You have a nine-day grace period after your CD automatically rolls over to make any changes or withdrawals penalty-free.

The bottom line

As far as big-name banks go, Discover offers great CD products. Wells Fargo, for example, only offers interest rates as high as 1.55% APY on a $5,000 deposit for a 58-month CD. Chase Bank offers even lower maximum rates — an abysmal 1.05% APY, and only if you can commit a minimum of $100,000 for 10 years.

If you’re the kind of person who likes to keep your finances in one place, Discover also has great credit cards, as well as competitive online savings and checking accounts. No matter how long you’re considering putting money in a CD, Discover is worth a look. Even if it doesn’t have the best available rate, it’s usually within several basis points of the top offerings and well above the average APY.

LEARN MORE Secured

on Discover Bank’s secure website

Member FDIC

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here

Advertiser Disclosure

Best of, Earning Interest

The Best Credit Union CD Rates – September 2019

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

The top credit union CD rates
Source: iStock

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 June 2019, the average one-year credit union CD had a 1.42% annual percentage yield (APY), compared to the 1.11% 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 September 5, 2019. We then eliminated any credit union with a health rating lower than a B and identified the top 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 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 often 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 — 15-Month CD, 2.70% APY, min. deposit $500

15 Month CD Special from USALLIANCE Financial

The rest of the credit union offerings on this list are 12-month CDs, however USALLIANCE Financial is offering a special 15-month Certificate with an outstanding APY of 2.70% that is about the strongest credit union CD offerings available. In addition, USALLIANCE offers at 9-month Certificate special that earns an impressive 2.50% APY. The credit union’s standard 12-month Certificate earns 2.30% APY. The minimum deposit for all three certificates is $500.

Membership in USALLIANCE Financial is open to residents of certain localities in Massachusetts, Connecticut and New York, as well as members of the American Consumer Council and a raft of other professional associations.

LEARN MORE Secured

on USALLIANCE Financial’s secure website

NCUA Insured

State Department Federal Credit Union– 12 Month Share Certificate, 2.42% APY, min. deposit $500

12 Month Certificate from State Department Federal Credit UnionDon’t worry, you don’t need a security clearance from the federal government to join this credit union—you simply need to sign up with the American Consumer Council and you can begin enjoying the benefits of your new membership.

One of those benefits, should you so choose, includes this 12-Month Share Certificate, which allows you to park your money in an account earning 2.42% APY with a minimum deposit of at least $500. You’ll have to pay 180 days worth of interest if you withdraw your money from the certificate before it matures, but it’s worth noting you can make a partial early withdrawal — and pay the penalty — without closing out the account completely.

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on State Department Federal Credit Union’s secure website

NCUA Insured

Communitywide Federal Credit Union — 12-Month CD, 2.40% APY, min. deposit $2,000

12 Month Share Certificate from Communitywide Federal Credit Union For over 50 years, Communitywide Federal Credit Union has provided banking services to the citizens of northern Indiana, and now a completely revamped online and mobile portal brings its great rates to you, wherever you are. Membership in Communitywide FCU is open to members of the Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley, as well as employees of over 40 companies in the central Midwest region.

In exchange for a $1,000 minimum deposit, Communitywide’s 12-month share certificate earns a 2.40% APY. One great feature is flexibility regarding your dividends, which may be compounded in the certificate, deposited to another share certificate, or transferred to another account. Another feature to understand is that there is no automatic renewal of Communitywide’s share certificates, which could be a good thing for savers who like to be reminded to survey the best rates available before rolling over their investments.

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on Communitywide Federal Credit Union’s secure website

NCUA Insured

Bellco Credit Union – 12 Month CD, 2.30% APY, min. deposit $500

12 Month CD from Bellco Credit UnionAnyone in the country can join this Colorado-based credit union by making a minimum $10 donation to the Bellco Foundation. The 12-month CD offered by Bellco earns a 2.30% APY and only requires a minimum deposit of $500, making it a winner for savers.

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on Bellco Credit Union’s secure website

NCUA Insured

United States Senate Federal Credit Union — 12-Month CD, 2.28% APY, min. deposit $1,000

12-23 Month Share Certificate from United States Senate Federal Credit Union
Fear not, you don’t need to be a member of the United States Senate to get this competitive rate on a share certificate — membership is open to anyone who joins the American Consumer Council or makes a contribution to the US Capitol Historical Society. With a minimum deposit of $1,000, the 12-month CD offered by the United States Senate FCU earns a 2.28% APY. Larger deposits earn marginally higher rates: Deposit $20,000 to $60,000 and your APY climbs to 2.33%, while a deposit of more than $60,000 earns 2.38% APY.

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on United States Senate Federal Credit Union’s secure website

NCUA Insured

Quorum Federal Credit Union – 12 Month Term Savings CD, 2.25% APY, min. $1,000

12 Month Term Savings CD from Quorum Federal Credit UnionHeadquartered in New York State, Quorum Federal Credit Union offers membership eligibility to anyone who joins the Ameircan Consumer Council. This credit union provides its members with all of the standard banking services you’d expect, including a suite of term savings deposits (CDs). While Quorum’s CD rates are strong across the board, of particular interest is the 2.25% APY earned by the 12 month term CD.

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on Quorum Federal Credit Union’s secure website

NCUA Insured

Sun East Federal Credit Union – 12 Month CD, 2.20% APY, min. deposit $500

12 Month CD from Sun East Federal Credit Union

Headquartered in Aston, PA, this credit union offers its services to members nationwide via the internet. Anyone can join this credit union by making a $10 donation to the Sun East Charitable Foundation, allowing them to enjoy one of the most competitive CDs around.

Depositors into this CD can expect an APY of 2.20% should they let the certificate fully mature. Otherwise, they face a penalty of 180 days worth of interest if they withdrawal the funds early.

LEARN MORE Secured

on Sun East Federal Credit Union’s secure website

NCUA Insured

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, 1.75% APY, min. deposit $1,000

UNIFY Financial Credit Union
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 1.32% in September. You’ll need to deposit a minimum of $1,000 to open this CD. If you withdraw your money early, however, you’ll face a penalty of 90 days’ worth of interest.

LEARN MORE Secured

on UNIFY Financial Credit Union’s secure website

NCUA Insured

NASA Federal Credit Union – 1-Year Share Certificate, 1.50% APY, min. deposit $1,000

NASA Federal Credit Union
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 it’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 days’ worth of interest.

LEARN MORE Secured

on NASA Federal Credit Union’s secure website

NCUA Insured

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 2018 mobile banking app analysis.

Eastman Credit Union – 1-Year Investment Certificate, 2.25% APY, min. deposit $1,000

Eastman Credit Union
Eastman Credit Union also has pretty restrictive membership requirements. You’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 2.25% on a 12-month CD with a minimum deposit of $1,000. 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.

LEARN MORE Secured

on Eastman Credit Union’s secure website

NCUA Insured

Wright-Patt Credit Union – 1-Year Certificate, 1.97% APY, min. deposit $500

Wright-Patt Credit Union
Unlike many credit unions, you can’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 $10.35 on a 12-month CD with just a relatively small $500 deposit. However, if you’re able to deposit $100,000 or more, you’ll earn an APY of 2.07%, which will return $2,170 in interest. Early withdrawal penalties vary depending on the original term of your CD, however they’ll be anywhere between 5-12 months’ worth of dividends.

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on Wright-Patt Credit Union’s secure website

NCUA Insured

Redstone Federal Credit Union – 12 Month MemberPlus Regular Share Certificate, 1.91% APY, min. deposit $1,000

Redstone Federal Credit Union
You can’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 1.91% 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.

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on Redstone Federal Credit Union’s secure website

NCUA Insured

SECU – 1-Year CD, 1.85% APY, min. deposit $500

SECU
The State Employees Credit Union of Maryland (SECU) is the largest credit union in the state of Maryland and is among the largest credit unions in the United States. Membership is open to employees, retirees and contractors of the state of Maryland, employees of Anne Arundel County, alumni, students, faculty and staff of University System of Maryland Schools, employees of organizations located in Maryland that receive federal, state or local funding, and over 500 local Select Employer Groups. SECU offers a decent rate of 1.85% on its 1-year CD.

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on SECU’s secure website

NCUA Insured

Delta Community Credit Union – 1-Year Certificate, 1.75% APY, min. deposit $1,000

Delta Community Credit Union
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 1.75%. The early withdrawal penalty is 90 days’ worth of interest on a 12-month CD.

LEARN MORE Secured

on Delta Community Credit Union’s secure website

NCUA Insured

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) than traditional banks, as of September 2018. 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.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lindsay VanSomeren
Lindsay VanSomeren |

Lindsay VanSomeren is a writer at MagnifyMoney. You can email Lindsay here