You may have heard that credit unions offer better interest rates on savings accounts than typical banks. For most savers this is true; a credit union can offer better APYs and fewer fees than traditional or online banking options.
Credit unions are an excellent way to help you meet your savings goals. If you are looking to jumpstart your savings, here are the best options to consider right now.
These options charge no monthly fee, offer a higher rate of interest, have minimal initial deposit requirements, and have low minimum daily balance requirements.
6 Best Credit Union Savings Account Rates for December 2023
Here are the best credit union savings accounts you can open today to earn the best APY:
- GreenState Credit Union: 5.16% APY
- Digital Federal Credit Union: 6.17% APY
- Quorum Federal Credit Union: 4.25% APY
- Affinity Federal Credit Union: 4.00% APY
- Alliant Credit Union: 3.10% APY
- Pentagon Federal Credit Union: 3.00% APY
1. GreenState Credit Union: 5.16% APY
Founded in 1938, GreenState Credit Union is the largest credit union in Iowa, with more than 430,000 members.
You can bank, borrow, invest, and get insured with GreenState’s suite of financial products. That includes a high-yield savings account offered through Raisin, previously known as SaveBetter.
GreenState’s current savings rate is well above the national average at 5.16% APY. Interest on the account compounds daily and is credited to your account on the last day of the month.
You can start saving with GreenState with as little as $1, with no minimum requirements to earn the full 5.16% APY.
GreenState serves customers across all 50 states. When you sign up for an account, Raisin will walk you through the process of becoming a member of the credit union.
As a credit union, GreenState is a member of the National Credit Union Administration, meaning your funds are insured for up to $250,000.
GreenState Credit Union HYSA
GreenState Credit Union is offering its members a high-yield savings account at 31.3x the national average. Help boost your savings with a 5.16% APY HYSA today.
2. Digital Federal Credit Union: 6.17%
Digital Federal Credit Union, or DCU, is a not-for-profit credit union that’s been in operation since 1979. They’ve served over 700 companies and 1 million members in that time nationwide.
DCU offers many ways to belong to it, including working for specific companies, belonging to certain organizations, or being a part of specific communities.
DCU’s Primary Savings account pays an impressive 6.17% on the first $1,000 deposited in your savings account. After the first $1,000, the rate drops to 0.15%. There aren’t any monthly fees, and you need only $5 to open an account.
If you have over $1,000 to keep in a savings account, you can consider the DCU Advantage Savings Account, which pays 3.56% APY with no limit.
3. Quorum Federal Credit Union: 4.25% APY
Quorum Federal Credit Union has been in business for 80 years, growing from nothing to a credit union with over 70,000 members.
The yield on Quorum’s HighQ Savings account is much higher than the national average, and there is no minimum deposit or average daily balance requirement.
If you sign up for e-statements, you don’t have to pay the $10 monthly service fee. Quorum Federal Credit Union is great in many ways, including the fact that its members can use more than 100,000 ATMs across the country for free.
To become a member of Quorum, you must work for an affiliated company or belong to the American Consumer Council or Select Savers Club.
4. Affinity Federal Credit Union: 4.00%
Affinity Federal Credit Union was formed in 1935. It started as the W.E. Headquarters Federal Credit Union to serve employees of the Western Electric Company. Today, Affinity is among the top 2% of credit unions and serves members nationwide. Affinity Federal Credit Union is not-for-profit and insured by the NCUA.
Affinity’s SmartStart Savings pays 9x the national average, with APYs up to 4% on the first $10,000 and 1% APY on balances beyond $10,000.
They don’t charge monthly fees or have minimum balance requirements, and you have access to unlimited transfers between Affinity or external bank accounts. They provide access to direct deposit funds up to two days early and have a robust mobile banking app.
5. Alliant Credit Union: 3.10% APY
Alliant Credit Union has an 85-year history and is one of the largest credit unions in Illinois. They have 700,000 members nationwide and provide online, mobile, and telephone banking services.
The savings rate that Alliant provides is higher than the national average, but to get the higher APY, you must open an account with at least $100. There are no monthly fees if you opt into eStatements.
Membership is open to anyone who works for an affiliated company, has a family member who works for an affiliated company, or lives in a community near the ACU headquarters in Chicago, IL.
In addition, anyone can join if they become a member of Foster Care to Success (Alliant pays the $5 membership fee for you).
Alliant’s mobile app is highly rated, and members can access a network of thousands of fee-free ATMs.
6. Pentagon Federal Credit Union: 3.00%
PenFed’s Premium Online Savings pays an APY of 3.00% on all balances. Members need only $5 to open an account to earn 6x the national average APY, and they don’t charge monthly maintenance fees.
PenFed is a nonprofit committed to helping its members achieve their dreams. PenFed was established in 1935, has 2.9 million members, and is the country’s second-largest credit union. They offer a wide selection of finance products, including checking, savings, auto loans, mortgages, and student loans.
PenFed is insured by NCUA, which is the equivalent of FDIC insurance for banks, protecting your deposits up to $250,000 per depositor. Even though PenFed is a credit union, it’s open to everyone, and all you need is $5 to open an account and call yourself a member.
Pros and Cons of Credit Union Savings Accounts
- Lower interest rates on loans than their bank counterparts. These loans include personal loans, car loans, student loans, and mortgages.
- Keep their fees low or nonexistent compared to banks. No one likes to be charged those monthly maintenance fees for not meeting the minimum balance or direct deposit.
- May offer higher interest rates on checking and savings accounts. Credit unions are the best option if you want the best rates locally.
- Membership Requirements. Before becoming a member, you must satisfy the credit union’s membership requirements.
- The majority of credit unions have a limited number of branch locations. These locations typically exist only in the communities served by the credit union.
- Many smaller credit unions lack the budget to provide the same services as large banks. And the technology utilized by credit unions, such as apps and websites, may lag behind that of large financial institutions.
Frequently Asked Questions
What is the difference between a credit union and a bank?
Banks typically offer a wider range of financial products, more physical locations, more standalone ATMs, and a better online banking (website) and mobile banking (app) experience than credit unions.
However, banks charge higher account fees, have stricter loan requirements, and return lower interest rates on savings accounts because they are for-profit organizations. Banks need to increase their profit margins to satisfy their shareholders.
On the other hand, credit unions return higher interest on savings and deposit accounts, provide a better customer service experience, and offer lower interest rates on credit cards and loans. Credit unions are also typically much more lenient with their lending requirements on loans.
For most consumers, a credit union will serve your daily banking needs the same as a typical bank.
- Receive your paycheck via direct deposit or other automatic transfer You’ll get a routing number and account number with your credit union the same way you would for a bank checking account.
- Make purchases from your checking account with a debit card.
- Deposit checks or funds through mobile banking app (app), ATM, or branch.
- Make cash withdrawals at branch locations and ATMs, including no-fee ATMS in the network with no fees.
Are credit unions FDIC-insured?
Not exactly. The Federal Deposit Insurance Corporation (FDIC) insures your money at banks, specifically, up to $250,0000 per depositor per account.
But there is similar protection for credit union members. The National Credit Union Administration (NCUA) insures your money at credit unions – up to $250,000 per member-owner per account.
Both NCUA and FDIC insurance offer essentially the same type and amount of coverage, so it comes down to your personal preference between a credit union and a bank to fit your financial goals. You can feel confident that your money is federally insured by both types of financial institutions.
Is it safe to put savings in a credit union?
Yes, money is very safe in credit unions. There’s a solid argument that they may be safer than banks.
Right now a much larger proportion of credit union accounts are covered (insured) than traditional bank accounts. According to the Credit Union National Association, more than 91% of all credit union deposits are insured whereas S&P Global says almost 46% of bank accounts are uninsured.
Additionally, credit unions are non-profit financial institutions. This eliminates pressure to engage in risky tactics — in hopes of high financial profit — to please for-profit boardholders as with recent First Republic Bank and Silicon Valley Bank (SVB) failures.
Beyond the NCUA insurance protection — for an account balance of up to $250,000 per account holder — there is additional protection for a joint or shared savings account. You can receive an additional $250,000 in insurance coverage, per person added to your account.
Finally, if a credit union is struggling, the NCUA will step in to fix any problems. If needed, the institution may be placed into a conservatorship, merged with another credit union, or be liquidated. In any scenario, your funds would be protected by the National Credit Union Share Insurance Fund (NCUSIF). To date, no member of a federally insured credit union has never lost one cent.
What type of savings accounts do credit unions have?
The money you don’t plan to spend right away can be kept safely in a savings account. Credit unions offer the same type of savings accounts that banks offer.
These savings accounts are useful for planning short-term needs, such as an emergency fund, and long-term goals, such as saving for a home down payment or retirement nest egg.
- Traditional savings accounts
- High-yield savings accounts
- Certificate of Deposits (CDs)
- Individual Retirement Accounts (IRAs)
- Money Market Accounts (MMAs)
Are credit unions or banks better for savings?
For most consumers, credit unions are better for savings because they return higher interest. They have fewer overhead costs than banks. But if you are in the millionaire circle — with an extra $5 million to stash away for a rainy day — then large prestige banks may offer better rates in savings products like jumbo money market accounts (MMAs).
Should You Open a Credit Union Savings Account
Credit unions are member-owned and not-for-profit institutions which sets them apart from banks.
You can expect to receive excellent customer service, lower monthly fees, and higher annual percentage yields from credit unions serving their members.
If you discover a credit union you’re interested in joining, consult its website for membership information and eligibility requirements, and if possible, visit it in person.