For Top Rates, Can Credit Unions Compete?

One of the things we’re proud of at DepositAccounts is how our patented rate-tracking technology isn’t built to monitor only banks, whose products dominate the coverage by most sites that list deposit rates. In the data universe we opted to create, more than 4,000 credit unions also populate our rate tables. Ranging from those with over a hundred thousand members and nationwide availability to tiny ones with a single branch and a mere one hundred members, credit unions play a fully co-starring role alongside banks on our stage of national, regional and local deposit rates.

Of course, our decision to track thousands of credit unions only goes so far in explaining why they appear on our site with any prominence. The other reason is simply that credit unions are typically among the most rate-competitive institutions a saver can access. Indeed, overlooking credit unions in your deposit portfolio would mean regularly missing out on a top available yield.

But exactly how often do credit unions give the very best-paying banks a run for their money? Are they a bit player once you enter the upper echelon of rates and the world of internet-only banks, or are they something more?

Since our rate search pages can provide a quick ranking of APYs for any deposit product at any point in time, we decided to run some tests to quantify exactly how competitive credit unions can be among the top-shelf national rates. And here's what we found.

A simple setup

We chose 10 standard deposit products to include in our analysis: four liquid accounts (personal savings, money market, standard checking, and rewards checking) and six different CD terms. We also decided to focus our lens exclusively on nationally available products, meaning banks and credit unions that accept deposits from customers living anywhere in the country and require no limiting membership terms.

We then searched our rate databases for these 10 products using a balance amount of $25,000, except for the two checking accounts, where we assumed a $5,000 balance. We pulled rate results on Monday, June 12, and included the ten best rates for each deposit product in our dataset.

Note that this means our data represents a snapshot in time, and our results wouldn't necessarily be precisely replicated in a future test. But since there's no reason to expect the current rate landscape is substantially different right at this moment than it would be at other times, we assume our findings are representative within a reasonable margin.

Tallying the credit union appearances

Starting with the four liquid account types, we quickly discovered that banks entirely dominate credit unions among the best-paying savings, money market, and standard checking accounts. In fact, among all the Top 10 rates for these three account types, credit unions offered only two of the top 30 rates.

Meanwhile, though, the script flips for rewards checking, where credit unions outnumber banks 4:1.

The competition heats up when we shift to certificates of deposit. Here, credit unions put up a respectable fight in several CD terms. Although they don't dominate any of the CD rankings, they are just as likely as a bank to offer a Top 10 rate for longer-term CDs, like 4- and 5-year certificates. And for every CD category we tested, credit unions appear at least twice in the Top 10.

We did one additional analysis on CD rates from credit unions versus banks, checking whether their competitiveness changed for IRA CDs. But across three terms we checked (1-, 3- and 5-year maturities), the number of credit unions in the Top 10 rates was exactly the same for standard and IRA certificates.

Below we’ve pulled all our findings together, and arranged the list not by product but by competitiveness of credit unions for each deposit type. This sorting highlights that rewards checking truly is the anomaly, where banks hardly make any inroads. All the other liquid accounts, meanwhile, appear at the opposite end of the spectrum, with credit unions playing a negligible (or non-existent) part in the Top 10 mix.

As a last crunching of the numbers, we gathered the Top 10 rates for all 10 products into a collective group of 100 rates. Taken as a whole, almost a third (31 percent) were offered by credit unions. Drilling down then on the 69 top rates offered by banks, we found that almost half of the top products (49 percent) came from internet-only banks.

Drawing the obvious conclusion

Savers who overlook credit unions – or don’t understand their sometimes-wide availability – do so at their own return-on-investment peril. While internet banks are a difficult horse to beat in the rates race, nationally available credit unions still manage to pull ahead 3 out of 10 times. And they outnumber physical banks 3:2 among the Top 100 rates.

The case for paying credit unions the attention they deserve is further strengthened when you include restricted credit unions. Though they aren't available to savers nationwide, they may be open to you, depending on your residency, current or former employer, or affiliation, such as a military background. And several credit unions with membership requirements would rival the Top 10 rates we looked at here. So in addition to shopping the national "easy access" credit unions, be sure to also shop locally, which you can easily do by indicating your city and state when you use our rate search tables.