We survey 90 credit unions every weekday to determine which ones have the best CD rates. We’ve created this list of credit-union-specific CD rates for people who prefer to work with credit unions because they’re customer-owned and often have better rates than banks. The credit unions below are available to customers nationwide, and they’re all federally insured institutions. Your funds are protected through the National Credit Union Administration, up to $250,000 per depositor per institution.
The list below highlights the best credit union CDs by term with a few months of wiggle room on either side of the term to capture the best rates available. Whenever there’s a tie, we favor credit unions with the lowest minimum deposit requirement and the most forgiving early-withdrawal policies.
Here are the best credit union CD rates available as of Sept. 10, 2020.
APYs are changing rapidly amid widespread uncertainty about the economy and financial markets. The Balance is monitoring rates and updating them accordingly.
| Term | Credit Union | APY | Minimum Deposit | Early Withdrawal Penalty |
|---|---|---|---|---|
| 3 Months (2–4 months included) | Chevron Federal Credit Union (3 months) | 0.80% | $500 | 3 months of interest |
| 6 Months (5–9 months included) | CommunityWide Federal Credit Union (6 months) | 1.00% | $1,000 | Complex formula; exercise caution |
| 1 Year (10–14 months included) | MAC Federal Credit Union (12 months) | 1.10% | $1,000 | 1 month of interest |
| 18 months (15–20 months included) | Pen Air Federal Credit Union (18 months) | 1.05% | $500 | 6 months of interest |
| 2 Years (21–29 months included) | MAC Federal Credit Union (24 months) | 1.25% | $1,000 | 3 months of interest |
| 3 Years (30–41 months included) | MAC Federal Credit Union (36 months) | 1.45% | $1,000 | 3 months of interest |
| 4 Years (42–53 months included) | MAC Federal Credit Union (48 months) | 1.50% | $1,000 | 3 months of interest |
| 5 Years (54–66 months | Greenwood Credit Union (60 months) | 1.50% | $1,000 | 6 months of interest |
| 10 Years (114–120 months included) | Apple Federal Credit Union (120 months) | 1.10% | $500 | 1,095 days of dividends |
Chevron Federal Credit Union: Best 3-Month CD
If the logo for Chevron Federal Credit Union looks a little familiar, there’s a good reason why. This credit union was founded in 1935 and has over 100,000 members. It primarily serves members employed by the Chevron Corporation (i.e., the gas stations you’re probably familiar with). If that’s not you, you can also join by making a $15 donation to join the Contra Costa County Historical Society, which makes you eligible for credit union membership. You’ll also need to keep $25 in a savings account, which is a tad higher than most credit unions.
In addition to Chevron FCU branches in California, members have access to over 5,000 CO-OP shared branches and 85,000 fee-free ATMs nationwide. Chevron FCU also offers checking and savings accounts, loans, and other services.
CommunityWide Federal Credit Union: Best 6-Month CD
CommunityWide Federal Credit Union was founded in 1967 and is based in northern Indiana. If you don’t live in the area or meet its employment-based membership criteria or have a family member who’s already a member, you easily can join by becoming a donor member of a partner organization such as the Marine Corps League of St. Joseph Valley, which starts at $15 per year. You must deposit $5 in savings. It’s also part of the CO-OP shared branching network.
MAC Federal Credit Union: Best 1-Year, 2-Year, 3-Year, and 4-Year CDs
MAC Federal Credit Union offers members financial products like checking, savings, and money market accounts, credit cards, insurance, and more. Originally founded in 1952 to serve the active duty and civil service personnel in Fort Wainwright, Alaska, the credit union is now open to anyone who purchases a two-year membership for $40 to the Association of the United States Army. When applying for the membership, just change the chapter to the Polar Bear Chapter in Fort Wainwright, Alaska.
Pen Air Federal Credit Union: Best 18-Month CD
Founded in 1936, Pen Air Federal Credit Union is the largest and oldest local credit union in Pensacola, Florida. Though there are only 15 locations in Northwest Florida and Southeast Alabama, there are more than 111,000 members nationwide.
In addition to CDs ranging in terms from three months to five years, Pen Air also offers personal and business savings and checking accounts, along with various other types of accounts and lending products.
It may be easier to join Pen Air Federal than some of the other credit unions on this list, as all you need is to join the Friends of Navy Marine Corps Relief Society if you don’t have the other affiliations listed on the Pen Air website. There’s no fee to join because Pen Air will make a $1 donation to the organization for you. You’ll also need to make a $25 deposit in a savings account to join.
Greenwood Credit Union: Best 5-Year CD
Founded in 1948, Greenwood Credit Union is a Rhode Island-based institution that boasts more than $450 million in assets. It offers business accounts alongside personal offerings such as checking, savings, and money market accounts, credit and gift cards, loans, and CDs with 3-month to 5-year terms. The credit union has more than 50,000 members, and the open membership means you don’t have to be affiliated with any particular organization to become one of them. Just open a savings account with $5 to start using its products and services.
Apple Federal Credit Union: Best 10-Year CD
Apple Federal Credit Union was founded in 1956 and has branches in northern Virginia. But customers nationwide can access accounts and use shared locations (including over 53,000 ATMs) through shared branching. If you’re not already eligible to join the credit union, you can qualify by joining the nonprofit Northern Virginia Athletic Directors, Administrators, and Coaches. NVADACA, which supports student athletes, offers membership at $20 per year. To get started with Apple Federal Credit Union, you’ll need to open a savings account with at least $5.
What Is a Credit Union?
Credit unions are financial institutions that provide banking services like checking accounts, savings accounts, and loans.1 They are customer-owned not-for-profit organizations, and they tend to have a community focus. To join a credit union, you typically need to share a common bond with other customers. For example, you might all work for the same employer or live in the same area. However, some credit unions, like those listed here, are available to customers nationwide. To qualify, you typically need to join a nonprofit organization, often with a small donation.
How Do Credit Unions Differ From Banks?
Credit unions provide many of the same services as banks. But their not-for-profit structure makes them unique. In theory, credit unions primarily focus on serving customer-owners and keeping rates competitive. Without the need to generate profits for outside investors or pay taxes on earnings, credit unions might have an edge. Still, it’s always worth comparing offerings from both banks and credit unions.
Concerned that a credit union is too small? If your credit union participates in shared branching, you can use branches and ATMs at other credit unions for free. The CO-OP shared branching network has over 6,000 branches across the U.S.—more than Wells Fargo or Chase.
“Membership” is another difference. To join a credit union, you must meet specific eligibility criteria. Banks, on the other hand, make their services available to anybody.Pros
- Customer-owned organization designed to serve them
- Competitive rates on loans and deposits
- Community focus
- Government-backed deposit insurance at federally-insured institutions
Cons
- Eligibility requirements may pose hurdles for some consumers
- Small institutions might lack some services
- Some large credit unions lose the community feel and focus
Why Are Credit Union Rates So Good?
Credit unions often pay higher rates on CDs than banks.2 Without the need to maximize profits for outside shareholders, credit unions can maximize what they pay out in savings accounts and CDs. Plus, credit unions don’t pay federal income taxes.3 That provides additional resources for offering high rates to members.
How Do CDs Work?
A CD is an account that pays a specified rate for a length of time that you choose.4 When you use a CD, you commit to leaving your funds with the bank, and you may have to pay a penalty if you withdraw funds early. Banks and credit unions typically reward you for your commitment by paying higher rates on CDs than they pay on savings accounts.
CDs are “time deposits.” To open a CD, you select a term (six months or three years, for example) and deposit money. Your CD “matures” when the term ends, and you can withdraw the proceeds or reinvest in another CD. If you do nothing, some banks and credit unions automatically reinvest into another CD with the same term.5
How Do Early-Withdrawal Penalties Work?
CDs pay more than savings accounts because you promise to keep your money untouched for an extended period. But if you need to withdraw funds, you can often do so—at a cost. An early-withdrawal penalty is a charge you pay to your bank when you take money out before a CD matures.
Penalties are often quoted as a number of days’ worth of interest. For example, a bank or credit union might have the following schedule of charges:
- For terms shorter than one year, pay 90 days of interest
- For terms of one year to five years, pay six months of interest
- For terms greater than five years, pay 12 months of interest
Early-withdrawal penalties typically increase on CDs with longer terms.
What Is a No-Penalty CD?
Some CDs do not have early-withdrawal penalties. You can take funds out of a no-penalty CD at any time without paying additional charges.6 You might have to wait at least seven business days after opening the account, but after that, the money is free and clear.
No-penalty CDs offer flexibility, but you may pay a small price to keep your options open. These CDs typically pay lower rates than CDs that feature an early withdrawal penalty (all other things being equal). Still, a no-penalty CD might make sense if you’re setting aside funds for an unexpected need. Likewise, if you think rates might fall, you can use a no-penalty CD instead of a savings account. That strategy allows you to lock in today’s rates (for a while, at least) while keeping your money liquid.
What Is a CD Ladder?
A CD ladder is a strategy that helps you avoid problems that may arise if you put all of your money into one CD.7 To use a laddering strategy, purchase multiple CDs with different maturity dates. By doing so, you have CDs mature periodically, and you can use those funds for spending needs. What’s more, as rates rise and fall, a ladder prevents you from investing everything into the lowest-yielding CDs.
For example, if you have $20,000 to invest, you might use the strategy below:
- $5,000 in a 6-month CD
- $5,000 in a 12-month CD
- $5,000 in an 18-month CD
- $5,000 in a 24-month CD
Whenever a CD matures, you put the proceeds into a new 24-month CD. As you cycle through CDs, you have cash available every six months. You can spend that money or reinvest at whatever rates are available.
What Should You Look for in a CD?
Earnings
The rate you earn from a CD is one of the most important aspects. Credit unions typically quote an annual percentage yield (APY), which helps you compare offerings from different places. APY accounts for compounding, so you don’t need to pay attention to compounding frequency if you use this measure.8 If you compare interest rates (but not APY), CDs with daily compounding are best, all other things being equal.
Safety
Verify that you buy CDs from a credit union that’s federally insured. NCUSIF insurance is backed by the U.S. government, and your funds are protected up to $250,000 per depositor per institution.9
Flexibility
As you evaluate CDs, review early-withdrawal policies. You may need to get your money before maturity, and it’s nice to know how much you’ll pay to do so. If multiple credit unions offer similar rates, consider using CDs with the most liberal early-withdrawal penalties.
Minimum Deposit
Before you commit to a credit union, investigate the minimum purchase requirements for CDs. Depending on how much you have to work with, that may determine where you open an account. CD minimums of $500 are not uncommon, but some institutions require $2,500 or more.
What Are Some Alternatives to CDs?
CDs are excellent for keeping your money safe while maximizing your earnings. If you’re keeping funds in a bank or credit union, a CD probably offers the highest rate. But other vehicles might be a better fit for your needs.
- Savings accounts also pay interest, but you can cash out if you need funds immediately—without worrying about an early withdrawal penalty.
- Money market accounts pay rates that are similar to savings accounts, but they may include tools for spending. For example, you might be able to use a debit card, checks, or online bill pay