The Pros and Cons of Opening a CD Account With a Credit Union

Credit Union papers for loan on desk.
designer491 / Getty Images/iStockphoto

When it comes to opening a certificate of deposit (CD) account, one option to consider is utilizing a credit union. Credit unions are not-for-profit financial cooperatives owned by their members, offering a range of services including CDs.

While credit unions have their advantages, it’s essential to weigh the pros and cons before making a decision. In this article, we will explore the pros and cons of opening a CD account with a credit union.

Pros of Opening a CD Account With a Credit Union:

  1. Competitive Interest Rates: Credit unions are known for offering competitive interest rates on their deposit products, including CDs. Due to their not-for-profit structure, credit unions may prioritize serving their members rather than generating profits for shareholders. As a result, they often offer higher interest rates on CDs compared to traditional banks, allowing you to earn more on your savings.
  2. Member-Focused Approach: Credit unions operate under the philosophy of “people helping people.” They prioritize providing personalized service and building relationships with their members. Opening a CD account with a credit union means you become a member and have a voice in the cooperative’s decision-making process. This member-focused approach can result in a more customer-centric experience compared to larger banks.
  3. Lower Fees and Better Terms: Credit unions are known for their favorable fee structures and terms. When opening a CD account, you may find that credit unions offer lower or no account maintenance fees, minimum balance requirements, and transaction fees. Additionally, credit unions often offer flexible terms for their CDs, allowing you to choose the duration that aligns with your financial goals.
  4. Community Involvement: Credit unions are deeply rooted in their communities and often actively participate in local initiatives and charitable causes. By opening a CD account with a credit union, you support an institution that reinvests in the community, helping to foster economic growth and social development.

Cons of Opening a CD Account With a Credit Union:

  1. Limited Branch and ATM Access: Credit unions, especially smaller ones, may have a more limited branch and ATM network compared to larger banks. If convenience and widespread accessibility are crucial to you, it’s important to consider the availability of branches and ATMs offered by the credit union before opening a CD account. However, many credit unions participate in shared branching networks and offer fee-free access to a large network of ATMs to mitigate this limitation.
  2. Fewer Technological Advancements: Credit unions, particularly smaller ones, may have fewer technological advancements compared to larger banks. This means you may experience limitations in online and mobile banking features, such as advanced account management tools or user-friendly interfaces. However, many credit unions have been investing in digital platforms to enhance their technological offerings and provide a more seamless banking experience.
  3. Membership Eligibility: Unlike banks, credit unions have membership requirements. To open a CD account with a credit union, you typically need to meet specific criteria, such as living or working in a particular geographic area, being employed by a specific company, or belonging to a certain organization or association. The eligibility criteria vary from one credit union to another, so it’s important to ensure you meet the membership requirements before considering a credit union for your CD account.
  4. Limited Financial Services: While credit unions offer a wide range of financial services, they may have limitations compared to larger banks. If you require specialized financial products or services beyond basic banking needs, such as international banking, complex investment options, or extensive commercial lending, you may find that credit unions have more limited offerings.
A Better Way to Bank

More From GOBankingRates

The article above was produced via automated technology and then fine-tuned and verified for accuracy by a member of our editorial team.


See Today's Best
Banking Offers