A certificate of deposit (CD) is an easy way to make your money work for you. And your money can work faster if you go after the higher rates that credit unions often offer.
Think of a CD as a savings account; except that the money is locked/frozen for a set period of time agreed upon with the financial institution.
You can’t use the money without paying a penalty during that time. You also can’t deposit additional money into it once you open it, unlike a savings account.
When the time is up, your money is unfrozen, and you have full access to it. To open a CD, most institutions require a deposit of at least $500.
Unlike loan interest rates, you want CD and savings account interest rates to be high — in fact, as high as possible! That’s because, with a CD or a savings account, the institution is paying you, and not the other way around.
Not Comfortable With the Online Fintech/Banking Options?
The online banking options are truly fantastic, but some people feel more comfortable placing their money in an institution they’re familiar with, and one that has a physical branch they can visit.
Well, look no further than your local credit union!
You may have Googled local CD rates in your area, but it seems like you never come across rates for local credit unions. Even if you look up sites that give you a listing of the highest rates in your area-most often, you’ll find banks listed rather than credit unions.
The best way is to look up a few credit unions in your area and either visit their website or give them a quick call. They’ll be happy to tell you their rates and their field of membership while they’re at it.
Higher CD Rates- So How Much More Are We Talking About?
One of the benefits that credit unions provide is higher rates on deposits than you’d normally find at banks. For you, that translates to more interest earned on your savings and CDs.
The difference in rates can be significant. For example-one of the largest banks in the country offers a 6-month CD that pays a whopping .02 %(cue the sarcasm), while a local credit union offers the same CD for 2%! That is night and day for your money.
In the above CD rate scenario, you would earn 50 cents at the bank and $50 at the credit union. This calculation was based on putting $5,000 into a 6-month CD.
If you were driving down the street and suddenly noticed a $5 bill on your dash, would you just say, “Oh, why is that there- it’s just in my way,” and let it blow out of the window?
Heck no, you wouldn’t!
When you settle for rates that are so low they’re almost non-existent, you’re not just throwing that $5 out the window once — you’re doing it month after month. You simply can’t ignore the stark difference between the numbers.
To see how much interest you’d earn on a CD, use an online calculator.
How Can I Join a Credit Union — Don’t I Have To Work for a Certain Company To Qualify?
While it’s true that not everyone can walk into every credit union and open an account, they are much more accessible than most people assume. Sure, some cater to specific companies, such as a school district or an airline. However, there are many community-based credit unions around, which means you are eligible to join as long as you live in a specific area.
You can call your local credit union and ask them what their Field of Membership is so that you know if you would qualify or not. Credit unions will almost always (unless the bank is running a promo) have higher CD rates than your local banks will.
Free Online Rate Comparison Sources
When you start reviewing the rates out there- you’ll come across rates so low they’re insulting. Take the time to compare rates before locking your hard-earned money away.
Save yourself the time and effort of reviewing rates offered at different institutions. Many sites offer rate comparisons for free. The following financial sites will help you quickly find what you’re looking for.
CD Valet. This user-friendly site dishes up the best CD rates available at FIs nationwide. Its real-time updates ensure you’re always looking at current rates, and what sets it apart is its inclusion of rates from local community banks and credit unions that often go unnoticed. They also have calculators for CD interest and CD penalty that are extremely simple to use.
Nerdwallet. You’re probably familiar with this one. It’s a financial site that covers a vast amount of financial information for consumers. They’ve been sharing helpful financial products and money management tips for over a decade and have solidified their reputation as a trusted source for comparisons and insights.
Hustler Money Blog. The name may throw you off at first, but it’s full of valuable banking information, rate comparisons, and current promos you don’t want to miss out on.
These sites conduct extensive research to share information with their readers. They offer a wealth of knowledge and genuinely want to educate consumers on ways to earn more and save more.
CDs are a great option if you have money that you can lock up for a certain period of time and not need it to live off of during that time. They’re a simple yet effective option to make your money work for you!
