Higher CD Rates at Privately Insured Credit Unions

Not all credit unions have deposit insurance that's federally insured. A small number only have private deposit insurance through the company American Share Insurance (ASI). With some ASI-only credit unions offering very competitive CD rates, I thought it would be a good time for a new review of this issue. You'll have to judge the safety of ASI and the institution to decide if you want to take advantage of these CDs. Below are two ASI-only credit unions which are offering some good CD deals. The rates are shown in the table above the post.

Christian Community Credit Union in California has a long history of very competitive special CDs. Credit union membership is open to members and employees of certain churches and ministries. Please refer to the credit union membership page for more details.

Credit Union 1 has branches in Illinois, Indiana and Nevada. They don't have many details on eligibility in their membership page, but it appears that if you live near one of their branches, there's a good chance you'll be eligible to join.

If you are eligible for the above credit unions and the CD rates are high enough, you may want to consider if you can feel comfortable with ASI deposit insurance. Here are some ASI facts:

• Only a few states allow credit unions to be privately insured (AL, CA, ID, IL, IN, MD, NV, OH and TX)
• These privately insured credit unions are legitimate credit unions that are regulated by their states
• ASI-only credit union liquidations have been rare. One failed in 2009 and one failed this year. In both cases the ASI arranged for another credit union to assume all shares of the failed credit unions.
• ASI has been insuring credit unions since 1974.
• There have been concerns that private deposit insurers have trouble when one of their large insured institutions fails. That may be one reason ASI has provided capital assistance to Silver State Schools Credit Union. This is a large Nevada credit union that has been having financial problems for last few years.

There have been credit unions that have changed from NCUA to ASI and from ASI to NCUA. Patelco Credit Union went from NCUA insured, to ASI insured and in 2008 it once again became NCUA insured. In 2009 I reviewed a Texas credit union that tried to replace NCUA insurance with ASI insurance. Credit union members must approve this change with a vote. As I described in this post, the Texas credit union almost did the switch, but the credit union management changed their minds.