Best Credit Union CD Rates – What is a Credit Union CD
Although both banks and credit unions can offer you a certificate of deposit, it pays to do your homework because differences do exist. Technically, the certificates of deposit are set up the same. However, the institutions offering the CDs are different.
Unlike banks, credit unions are defined as non-profit financial institutions. Credit unions are owned and oftentimes operated by their members. Credit unions provide financial services for their members that include lending and savings.
How to Get a Credit Union CD
In order to join a credit union, you must belong to a particular organization or union. In addition, many large companies organize credit unions for their employees. When you deposit money with a credit union, you then become a member. This is because your deposits are considered partial ownership in the credit union.
Benefits of Purchasing CDs Through a Credit Union
There are some definite benefits to purchasing CDs through a credit union. First, the interest rates on credit union certificates of deposit are typically higher than those on a bank certificate of deposit. These high CD rates are due in large part to the fact that because credit unions are non-profit organizations, they typically return their earnings back to their members in the form of higher interest rates or lower loan rates. Banks, on the other hand, must return profits to their shareholders. Being non-profit also means that it is cheaper to run credit unions. With these lower expense ratios, credit union members benefit from the higher interest offered on credit union CDs.
Credit Union CD Insurance
Similar to the FDIC insurance offered on bank CDs, your credit union certificates of deposit are also insured. A federal agency called the National Credit Union Administration, or NCUA, insured federal credit union accounts, including CDs. The cap limit amount of this insurance is $250,000.
Where to Find the Highest Credit Union CD Rates
It is important to do your homework prior to making any investment. Similar to any other CDs, however, your will receive the higher interest rates on CDs with longer term maturities in return for leaving your funds deposited with the financial institution for a longer period of time.