If you’re frustrated with the various fees your current bank charges or simply want to open a savings account at a different institution, you should consider a credit union. Credit unions are an increasingly popular option thanks to their ability to offer higher savings return rates.
Although more people are choosing credit unions, there are still some prevalent misconceptions about these financial institutions. The most common is that joining a credit union requires working for the government or being in the military. While some credit unions do require membership in a certain community, most are open to the general public.
Another common misconception is credit union savings aren’t insured the same way that banks are. It’s true that credit unions are insured by the National Credit Union Administration instead of the Federal Deposit Insurance Corporation. However, the NCUA provides the same protection as the FDIC for deposits up to $250,000.
Since many credit unions are open to the general public and offer the same insurance protection as banks, you may be wondering what actually sets the two types of financial institutions apart. The key difference between a credit union and bank is the former is a nonprofit that’s governed by volunteer members. That structure also means the average credit union is half the size of an average bank.
The smaller size of credit unions makes it possible for them to offer a more personalized experience to their members. Credit unions are also able to offer lower average rates on loans and higher rates on savings accounts. To help you make the best decisions about how to maximize your savings, we’ve analyzed dozen of credit unions that operate nationwide and chosen the five best for high interest savings in 2016:
With a CapEd high yield checking account, members of this credit union can enjoy an annual percentage yield of 2.5%. Applicants who don’t meet the credit union’s standard membership requirements can still join by making a $20 donation to charity.
This type of high yield account has several requirements. The first is to make a minimum of 12 debit card transactions a month. CapEd also requires direct deposit and either bill payment or automatic withdrawal, as well as e-statements. The high yield checking account has a balance cap of $10,000. The APY above that cap drops to 0.2%.
MyRewards and Xtraordinary Checking are the two high interest programs offered by Connexus Credit Union. MyRewards provides a 1.35% APY, and Xtraordinary Checking is 1.75%. Both programs require automatic withdrawal or bill pay, as well as e-statements and direct deposit.
They each have a balance cap of $25,000. The main difference between the two programs is MyRewards requires 10 debit transactions a month and Xtraordinary Checking has a minimum of 15 monthly debit transactions.
A Free Rewards Checking account from Consumers Credit Union offers a high annual percentage yield of 3.09% on balances up to $10,000. This account requires at least 12 debit transactions every month. An important note is debit transactions must be signature-based instead of using a PIN to qualify. E-statements are another requirement, as are direct deposit and either automatic withdrawal or bill pay.
One very interesting aspect of the Consumers Credit Union Free Rewards Checking Account is members can earn an even higher annual percentage yield. Members can earn 3.59% APY on balances up to $15,000 by spending at least $500 a month on their CCU Visa credit card. The annual percentage yield increases to 4.59% on balances up to $20,000 for members who spend over $1,000 a month on their CCU Visa.
With an APY of 1.58%, First Tech Federal Credit Union is a very appealing option for anyone who wants to get more out of their savings. Maintaining an account with First Tech FCU requires 12 or more debit card transactions each month. Other requirements include e-statements, direct deposit and bill pay or automatic withdrawal. First Tech Federal Credit Union has a balance cap of $10,000. The APY for a balance above that cap drops to 0.16%.
Last but certainly not least is Lake Michigan Credit Union. This credit union’s Max Checking offers an impressive 3% APY. Those located outside of the credit union’s area can still open an account by making a $5 donation to charity. Maintaining an account also requires 10 debit transactions a month, direct deposit, e-statements and a minimum of 4 monthly online banking log-ins.
By looking into the credit unions we covered and picking the one that’s the best fit for your specific financial profile, you can secure a much better APY than you would get with a standard checking or savings account.