The Best CD Rates Are from Credit Unions Right Now. Here Are the Top Offers (2024)

CD rates are higher than they’ve been in years—but you might not know this if you just look at big banks. In fact, some of the best rates right now aren’t being offered by banks at all. They’re offered by credit unions.

Although they might fly under the radar, credit unions operate a lot like banks, taking deposits and making loans. But they do have some quirks. They operate as not-for-profit cooperatives, which means you have to join to become a customer. And frequently their CDs are called “share certificates,” although they operate much the same way.

Even if you’re not a member of a credit union now, there are many credit unions that you can join at little or no cost in order to open an account and take advantage of their lower rates.

Credit union’s nonprofit status means they often offer better rates and lower fees than big banks on all sorts of financial products, from loans to savings accounts, including CDs. But with many credit unions struggling to attract deposits their CD terms are especially sweet right now, experts say.

The upshot: Half of the top 12 CD rates on DepositAccounts.com, a site that aggregates banking rates, are offered by credit unions. Right now, you can earn a fixed APY as high as 5.5% at some credit unions, while the average one-year CD rate at a bank is just 1.59%.

Why credit unions have such high CD rates now

Credit unions frequently offer financial products with more attractive interest rates and lower fees than conventional banks. That’s in large part because as membership-owned cooperatives, they don’t feel pressure to generate large profits to payout as dividends and shareholders. They also don’t tend to spend as much on marketing as the nation’s largest banks, leaving more money for members.

“Nonprofit status allows credit unions to focus on their mission of servicing members as opposed to maximizing profits,” says Dawit Kebede, senior economist for the Credit Union National Association, an industry trade group

While these factors are always in play, lately many credit unions have been sweetening their terms even further. While the collapse of Silicon Valley Bank didn’t affect credit unions directly, it caused turmoil in the regional banking industry, as customers yanked money from small and midsize banks.

The upshot is that both midsize banks and credit unions, which frequently compete with them, have found themselves in a battle for deposits. For credit unions, offering attractive terms on products like CDs is a key tactic, because unlike for- profit banks they can’t raise money by selling stock and have muchand much more limited access to bond markets, according to Curt Long, chief economist and vice president of research at the National Association of Federally-Insured Credit Unions. “Credit unions don’t have the avenues that banks do to raise funding,” he says.

The best credit union CD rates

With nearly 5,000 credit unions in the country, there are plenty of favorable CD and share certificate rates out there. Here are some with top APYs from DepositAccounts.com.

We looked for certificates that require a minimum deposit of $1,000 or less. Since credit unions require you to join in order to become a customer we also focused on those that anyone can join at little or no cost.

Workers Credit Union

• APY: 5.65%, variable: Fed’s benchmark fed-funds rate plus a quarter of a percentage point
• Minimum deposit: $500
• Term: 36 months

Membership requirements: Anyone can join by letting the credit union make a $5 donation on your behalf to the United Way of North Central Massachusetts, or a $5 enrollment fee to become a member of the Financial Fitness Association for a year. (Continued donations or membership aren’t required once you’re a member of Workers.)

Bellco Credit Union

• APY: 5.5%
• Minimum deposit: $500
• Term: 6 months

Membership requirements: Anyone can become a Bellco member by making a $10 donation to join the Bellco Foundation, which supports local charities near its Colorado headquarters.

Dow Credit Union

• APY: 5.27%
• Minimum deposit: $500
• Term: 6 months

Membership requirements: Anyone can become a member by making a donation of at least $10 to the Dow Credit Union Members Endowed Scholarship Fund

Credit union CDs are frequently called certificates or share certificates, terminology that reflects their status as member-owned cooperatives.

These certificates work like bank CDs in that you earn interest—usually at a higher rate than you’d get from a savings account—in exchange for locking up your funds for anywhere from a few months to five or more years.

Like bank CDs, the vast majority of credit union certificate APYs are fixed for the life of the term, although there are a few exceptions: Bump-up CDs, which let you raise your rate one or more times during the term, and variable-rate CDs, such as the “flex” CD highlighted above. And with the exception of no-penalty CDs, if you need your money before the maturity date, you’ll have to pay a penalty to “break” the CD and get it out.

Do you have to join?

One of the biggest differences between banks and credit unions is that you have to join a credit union to access its financial products. Traditionally, credit union membership was reserved for people who lived, worked, went to school or worshiped in a particular geographic region, or for employees of affiliated companies. While many of the nation’s 4,760 credit unions still operate this way, a growing number of online credit unions have adopted the approach popularized by branchless, online-only banks, making it easy for anybody to become a member regardless of where they are.

Are credit unions FDIC insured?

It’s important to make sure that your deposits are protected in case the institution fails. Bank accounts and CDs are protected up to $250,000, per account type, per bank by the Federal Deposit Insurance Corp. The FDIC doesn’t cover credit unions, but a different agency, the National Credit Union Administration, or NCUA, provides a parallel level of protection. (You can find NCUA member credit unions at the agency’s website.) If you take out a CD at a member credit union, your money is protected up to $250,000 in the unlikely event that the credit union fails.

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