Credit unions are financial companies formed by members with a common bond. When the need arises, people with a common agenda come together and pull their resources together to uplift one another financially. The institutions operate like banks, although there are slight differences between the two. For example, credit unions have higher interest rates on savings than banks. You will learn about credit union savings account interest rates later on.
Interest rates are the extra amount of money you get on top of what you saved. Credit unions offer interest rates on your savings account so that you can realize the value of your money. Most financial companies calculate your interest rate annually, while others calculate and pay quarterly. It is crucial to note that some financial companies offer to check accounts that earn interest when you maintain a particular balance plus other qualifications.
One can open a checking or savings account at a credit union. A checking account allows you to spend money anytime you need it. You can use the account to keep funds for emergency issues such as food, traveling, medication, and so on. Instead of keeping such money in your house, which is risky, it is essential to keep the funds in a bank or credit union account where they are safe. And by the way, a checking account, whether from a bank or credit union, comes with a debit card to easily access your funds.
How do you open a credit union account?
Credit Unions allow you to open your account online or at a physical branch. Opening your account online is more convenient than at a branch because you can carry out the process right from your couch, bed, or even while traveling. You just need a smartphone and a reliable internet connection. You can also use a computer or tablet to set your account into action.
When opening an account online, it is crucial to ensure that you use a secure connection. That secures your data from hackers who may steal your crucial information leading to loss of money. Thousands of people in the world have lost money to fraudsters when transacting online.
Before opening your account, you will need various things, which include an identification document (state/national ID, passport, or driver’s license), physical address, phone number, and your Social security Number. Again, it is always possible to get a no credit check credit union account at many credit unions. That means they do not pull a hard inquiry on your scores.
Once you have all the things with you, you can start opening your account. You just need to visit the institution’s website and navigate the account application. You will then choose between a savings and a checking account. In our case, you will go straight to open a savings account.
After filling in all that is required, you will submit the details for verification. You may get feedback immediately or after a few minutes. One can also apply for an account at a physical branch, whereby they must walk in with all the necessary documents.
What are the Credit Union savings account interest rates?
Credit union interest rates are usually higher compared to those of banks. That is why most people prefer saving money in a credit union other than a bank account. You can find a union with a savings account that earns high-interest rates of up to 0.60%.
For example, Alliant Credit Union Ultimate Opportunity savings account interest rates of up to 0.55%. Comparing that with the national average rate, which is 0.06% APY, you find that credit unions reward highly on your savings.
We also have banks that offer high savings interest rates as well. For example, the American Express® High Yield Savings Account from the American Express National Bank gives you interest of up to 0.50% with a $1 minimum balance. Chime High Yield Savings account gives you an APY of 0.50% with a $0.01 minimum balance.
Usually, credit unions offer high APY on your savings and low APR when you get loans. The best credit unions for personal loans even give you a long grace period and a lengthy loan repayment period so that you do not have to strain so much to service your loans.
Which are the best credit unions for a savings account?
Various credit unions give you high APY on your savings, thus making your money multiply quickly. The following are some of the best unions you should consider when opening your account.
i) Alliant Credit Union
Both the checking and the savings accounts earn you interest to realize the value of your money. Your checking account earns you a 0.25% APY if you receive e-statements and make at least one electronic deposit a month.
Moreover, the High-Rate Savings account earns you 0.55% APY on $100 or more balances. You can avoid monthly fees if you register for e-statements.
ii) BECU
BECU gives you up to 2.02% APY on the Youth savings account. You can also get 0.50% APY on checking and 0.50% APY on savings if you maintain balances of up to $500. You can apply if you live in Washington DC or select regions of Idaho and Oregon.
iii) Consumers Credit Union
Consumers Credit Union is another excellent institution that you can use to get high-interest rates. You can earn money on the Rewards checking account up to 4.09% APY if you maintain balances up to $10,000.
You must also attain other requirements, such as spending at least $1,000/month on an affiliated credit card. The institution’s savings account pays much lower APY than the checking account. It gives you an APY of 0.05%.
iv) Connexus Credit Union
If you open the Xtraordinary checking account, you will be able to earn 1.75% APY on balances up to $25,000. That is if you meet several requirements, such as subscribing to e-statements and making around 15 debit card purchases or even spending $400 with your debit card every month. For the savings account, you must maintain a minimum daily balance of $100 to earn some interest.
v) Credit Union of Southern California
The institution is among the best credit unions in California. It operates online and gives amazing APYs for various savings accounts. The Holiday Saver and the Summer Saver give you APYs of up to 0.30%.
vi) First Tech
The First Tech Rewards Checking account earns you up to 0.50% APY on balances of $15,000 or less if you meet three requirements: receiving e-statements and making 20 monthly purchases totaling at least $500 using your debit or credit card. The savings account has a bit lower APY.
vii) Suncoast Credit Union
The institution allows you to earn your union’s share certificates up to 0.95% APY for a five-year term. If you live, school, work, or worship in the eligible Florida counties, you can join the institution.
What are the differences between credit unions and banks?
Banks and credit unions are all financial companies. However, there are differences between banks and credit unions that set them apart despite offering almost similar services. The following are some of the differences between the two.
- Credit unions require members with common bonds, while banks allow anyone with the proper documents to open accounts. Common bond means sharing something in common, for example, worshiping in the same church, working in the same company, living within the same area, and doing the same business, among others.
- Banks are profit-oriented and charge various fees to make money. However, the unions only aim to uplift their members financially and not to make money. That is why unions charge lower interest rates on loans compared to banks.
- Most credit unions are localized, while most banks operate countrywide.
How are banks similar to credit unions?
Despite having some differences, banks and credit unions still have some similarities. For example, credit unions offer savings and checking accounts. On the other hand, banks offer the same to their customers.
Additionally, credit unions give debit cards for checking accounts. You can get credit cards from credit unions as well. Banks also give debit and credit cards. The cards allow you to make purchases online and at physical stores, as well as withdraw money at ATMs.
Furthermore, banks and credit unions allow you to manage your money online using mobile banking apps. You can therefore access your money conveniently. One can also open an account online by submitting the necessary documents.
Again, when you take loans from banks and credit unions, they report your repayment patterns to the credit bureaus. Similarly, when you apply for a loan from any institution, they pull a hard inquiry on your scores.
Bottom line
Credit unions are financial institutions that allow members with a common bond to come together and put their funds together. They can uplift each other financially since you can borrow loans to develop yourself financially.
Interestingly, credit unions offer higher savings account APYs compared to banks. Most of them even allow you to earn APY when you meet specific qualifications.
