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Are You Ready for a Cashless Society?Survey of Special High-Yield Low-Cap Credit Union CDs
POSTED ON BY Ken Tumin
Several credit unions have been offering special CDs with very high yields but with low maximum deposits. These are often new-member specials or youth CDs. Instead of having multiple posts on all of these, I thought I would just have this one post. If you've seen others that I've missed, please leave a comment.
To measure the value of one of these CDs, I compare it against an online savings account. For today's rate environment, I'll use 3.75% APY as a respectable yield. I then compute how much extra someone would earn in one of these CDs compared to the savings account. Here's an example.
Assume a 6% special 3-mo CD with a maximum deposit of $1,000. Here's how I compute its value:
In the above example, you'll only earn $5.63 over what you would have earned if you had just kept the money in a 3.75% account for those 3 months. As you can see with a low maximum deposit and a short term, this kind of special CD could be more trouble than it's worth. With this in mind, below is a list of some promotional stimulus CDs that I've been able to find. All yields are based on APY. The extra amount is based on what I described above. If you've seen others, please leave a comment.
Thanks to the readers who emailed me info on some of these special CDs.
To measure the value of one of these CDs, I compare it against an online savings account. For today's rate environment, I'll use 3.75% APY as a respectable yield. I then compute how much extra someone would earn in one of these CDs compared to the savings account. Here's an example.
Assume a 6% special 3-mo CD with a maximum deposit of $1,000. Here's how I compute its value:
Interest rate advantage = 0.06 - 0.0375
= 0.0225
Extra earnings for 1yr = $1,000 * 0.0225
= $22.5
Extra earning for the
specific CD term = (3mo/12mo) * $22.5
= $5.63
In the above example, you'll only earn $5.63 over what you would have earned if you had just kept the money in a 3.75% account for those 3 months. As you can see with a low maximum deposit and a short term, this kind of special CD could be more trouble than it's worth. With this in mind, below is a list of some promotional stimulus CDs that I've been able to find. All yields are based on APY. The extra amount is based on what I described above. If you've seen others, please leave a comment.
- 7% 7-Month $1K Max (extra $19) at Southland CU. In SoCal. Requires referring a new member. See my post regarding eligibility
- 6% 12-Month $1K Max (extra $23) at Rivermark Community CU. In Oregon. See my post regarding eligibility
- 10% 1-6yr Youth CD $1K Max (extra $63-$378) at Neighborhood CU. In Dallas Metro. See CU's membership page
- 10% 1-6yr Youth CD $1K Max (extra $63-$378) at Missoula FCU. In Montana. See CU's membership page
- 7% 7-Month $700 Max (extra $13) at MidAmerican CU. In Kansas. See CU's membership page
- 7% 6-Month $5K Max (extra $81) at Tracy FCU. In Tracy, CA. See my post regarding eligibility
- 7% 7-Month $2K Max (extra $38) at Elevations CU. In Colorado. See my post regarding eligibility.
- 7% 12-Month $1K Max (extra $33) at Patelco CU. In CA, but with easy membership (see post).
Thanks to the readers who emailed me info on some of these special CDs.
My thrifty 17-year old opened a new member account, a gr8 r8, and a CD. Recently, she opened a money-market account to hold her paychecks while she accumulates for another CD.