Sometimes, credit unions can offer the strongest CD rates on the market. Many investors have noticed that the CD rates offered by credit unions often exceed those given by banks. Here, we’ll discuss some of the pros and cons of purchasing CDs with credit unions.
Credit Unions Offer Plenty to Investors
First of all, many credit unions consistently deliver very high interest rates on CDs. This makes them especially attractive to investors. In many cases, credit unions will offer an interest rate that is roughly half a percent higher than the interest rates offered by nearby banks.
Credit unions can afford to provide such high interest rates because they engage in cooperative savings. The earnings of the credit union are returned to members as high rates on savings. Most credit unions are also nonprofit organizations. This means they are not beholden to a group of shareholders. So, credit unions have the capability to offer high interest rates on CDs.
Options for Different Types of Investors
Also, credit unions also sometimes present CDs that have a lower minimum principal deposit than banks. This appeals to investors of lower income brackets, or simply to investors who wish to invest a small amount of money in a CD. Credit unions also offer CDs with short maturity rates, giving investors the chance to receive payments sooner than with traditional bank CDs.
Many people have a knee-jerk reaction to CDs in that they always go to banks. Banks are viewed as more stable institutions than credit unions. But, properly accredited credit unions can offer some of the best CD rates available on the market. It’s a good idea to investigate these institutions before you make your investment in either a bank or credit union.
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