CD Rates Offered by Local Banks Are Higher than Credit Union Rates – But Just Barely, According to New Study

Interest rate-aggregating website,, performed a study comparing today’s average CD rates from both local banks and credit unions, discovering bank CD rates tend to be slightly higher than credit union rates on average.

EL SEGUNDO, CA (May 31, 2013) Depositors who want to grow their savings in a time when interest rates are at their lowest have few options – and considering the Federal Reserve has promised to keep rates at near-zero through 2013, consumers must turn to higher-yielding accounts like CDs to eke out a decent return on balances.

In light of recent movements like Bank Transfer Day, when it comes to where depositors choose to open CD accounts, the prevailing notion is that local is better. However, in its latest interest rate study, sought to find out whether it’s local banks or credit unions that consistently provide higher-yield options.

Surveying more than 10,000 6-month, 1-year and 2-year CD rates from financial institutions across the U.S., found that community banks, on average, outperform credit unions in interest rates offered on CDs.

Key Findings

First, CD rates for all financial institutions in the GoBankingRates interest rate database were averaged across each term:

CD Term:                     Average Rate (Banks and CUs)

6-Month CD:                 0.30% APY

1-Year CD:                   0.44% APY

2-Year CD:                   0.65% APY

When broken down by institution type, however, average local bank rates are slightly higher than credit union rates for two of the three certificate of deposit terms included in the study:

CD Term:                     Average Bank Rate;  Average Credit Union Rate

6-Month CD:                 0.31% APY;                  0.29% APY

1-Year CD:                   0.44% APY;                  0.45% APY

2-Year CD:                   0.66% APY;                  0.65% APY

In both the 6-month CD and 2-year CD categories, local banks averaged the higher rates, contrary to the popular belief that not-for-profit institutions outperform banks significantly when it comes to interest rates on deposit accounts. Credit union interest rates were higher for 1-year CD rates only.

GoBankingRates managing editor, Casey Bond, notes that these differences in rates are by hundredths of a percent in each case. She explains, “Interest rates on deposit products like savings accounts and certificates of deposit are already so low across the board that these minor variations are negligible when it comes to earning interest — depositors will not experience any noticeable gain or loss on funds deposited in, for instance, a 6-month CD with a rate of .29% APY versus .31% APY.”

Ms. Bond adds, “What the data tells us is not that local banks are superior to credit unions, but rather that they are just as competitive in terms of CD rates.”

The study concludes that CD rates from local bank rates are so close to credit union rates that there is no discernible benefit to choosing one over the other for savers who are simply looking to maximize their returns. Bond advises local depositors to “investigate all of the savings options available within your city, including both credit unions and community banks in your search.”

Additional Details About This Study

The interest rates used in this study are accurate as of April 30, 2013 and come from GoBankingRates’ database of over 4,000 U.S. banks and credit unions. GoBankingRates manually collects and updates these rates regularly, and rates are based on institutions’ online published rates.

Interest rates assume an individual depositor with a $10,000 principal. Please note that rates may change at any time and may have changed since the publish date.

View the full study here.

For questions about this consumer guide or to speak with Casey Bond, please use the contact information below.

About is a national website dedicated to connecting readers with the best interest rates on financial services nationwide, as well as informative personal finance content, news and tools. collects interest rate information from more than 4,000 U.S. banks and credit unions, making it the only online rates aggregator with the ability to provide the most comprehensive and authentic local interest rate information.

More News