Banks vs. Credit Unions: Which Have the Best Interest Rates?

If you had to guess, which type of institution would you say has the best interest rates: banks or credit unions? You might be surprised to learn the answer is “both.”

GOBankingRates recently surveyed interest rates for savings accounts, checking accounts, money market accounts and a variety of certificate of deposit terms to find out if U.S. banks or credit unions are more competitive when it comes to the yields they offer account holders. See below for the findings.

On average, credit unions provide the highest interest rates for all deposit account types.

John Skul, AVP of Marketing for one of the top-ranking credit unions, Great Lakes, told GOBankingRates, “Our goal is to encourage our members to use GLCU as their primary financial institution. Offering them a fantastic rate is a win-win for both GLCU and our members – they receive a great interest rate on their checking account and we benefit when they meet the criteria to receive the great rate.”

Below is a look at how bank and credit union interest rates have changed over the past year.

10 Best Interest Rates: Banks

While credit unions have the highest rates on average, banks boast the highest individual interest rates available today with 4.00% APY offered by Home Federal Bank and the Bank of Greene County.

Additionally, in the case of both banks and credit unions, the highest interest rates today are offered almost exclusively on checking accounts, many of which are Kasasa Cash accounts.

Home Federal Bank, Smart Rewards Checking

The Smart Rewards Checking account from Home Federal Bank provides account holders an interest rate of 4.00% APY on balances up to $15,000, plus tiered interest rates on balances above $15,000.

The Bank of Greene County, e-Savings

The e-Savings Account provides a rate of 4.00% APY on balances of $1-$1,000. Balances over $1,000 will continue to earn interest at 0.25% APY. These rates are also offered on The Bank of Greene County’s ePremiere Checking account.

JD Bank, Kasasa Cash Checking

The Kasasa Cash free checking account from JD Bank pays 3.25% APY on balances up to $10,000 and 0.25% APY on balances over $10,000.

Community Financial Services Bank, Kasasa Cash Checking

Community Financial Services Bank’s Kasasa Cash Checking account earns 3.05% APY on balances up to $20,000, and 0.50% APY over $20,000, depending on the balance. A rate of 0.10% APY is offered if qualifications aren’t met.

Frontier Bank, Kasasa Cash Checking

Similar to the account above, Frontier Bank’s Kasasa Cash Checking account earns 3.05% APY* on balances up to $20,000, 3.05% to 0.72% APY on balances over $20,000 depending on the balance, and 0.05% APY if account qualifications aren’t met.

Adirondack Bank, eCO CHECKING

Adirondack Bank notes its eCO CHECKING account is “Best suited to those who prefer to handle their account activity electronically.” Account holders earn the specified rate on balances of $1 – $25,000.

American Trust & Savings Bank, REWARDChecking

The REWARDChecking account from American Trust & Savings Bank is a free, high-interest checking account that pays 3.01% APY on balances up to $15,000, 0.25% APY on balances over $15,000, and 0.05% APY if account qualifications aren’t met.

The Community Bank, Reward Checking

Though the Community Bank is based in Ohio, the reward checking account is available to anyone in the country. Balances of $10,000 and under earn 3.01% APY, while balances of $10,001 and up earn 0.25% APY.

Ouachita Independent Bank, OIB Reward Checking

Like the account above Ouachita Independent Bank checking account holders earn 3.01% APY on balances up to $15,000, 0.25% APY on a portion of balances over $15,000, and 0.05% APY if qualifications aren’t met for the OIB Reward Checking product.

Southern Bank, Kasasa Cash Checking

Southern Bank’s Kasasa Cash Checking account pays 3.01% APY on balances up to $15,000, 3.01% to 0.48% APY on balances over $15,000, depending on the balance, and 0.10% APY if qualifications aren’t met.

10 Best Interest Rates: Credit Unions

Alabama Telco Credit Union, Centsible Savings™ Account

The Centsible Savings Account works like a “keep the change” savings program, in which debit card purchases are rounded up to the next dollar and the difference is automatically deposited into the savings account. New account holders who open by June 30, 2014 will earn 3.00% APY.

Great Lakes Credit Union, Ultimate Checking

The Ultimate Checking account from Great Lakes CU is a rewards account that pays 3.00% APY on balances up to $10,000. Additionally the account allows for up to a $5 ATM rebate per month, no monthly fee and no minimum balance required.

Gulf Coast Community Federal Credit Union, Kasasa Cash Checking

The Kasasa Cash Checking Account at Gulf Coast earns 3.00% APY on balances up to $25,000, 3.00% – 0.45% APY on balances over $25,000, depending on the balance, and 0.05% APY if qualifications are not met.

Lake Michigan Credit Union, Max Checking

The Max Checking account from Lake Michigan CU pays 3% APY on balances up to $15,000, and will refund up to $15 per month in surcharge fees if account holders use a non-LMCU ATM. Additionally, there are no fees, and no minimum balance requirements.

Meridian Trust Federal Credit Union, MaxRewards Checking

Meridian Trust FCU’s MaxRewards Checking account pays up to 3.00% APY and charges no maintenance fees.

Partner Colorado Credit Union, High Interest Checking

The High Interest Checking account from Partner Colorado Credit Union is a straightforward high-yield account that pays 3.00% APY as long as account holders complete 20 signature-based debit card transactions ($5 minimum per transaction) per month, receive e-statements and use online or mobile banking.

UniWyo Federal Credit Union, Xtraordinary Checking

The maximum interest rate, which is currently 2.99% APY, is paid on balances up to $15,000. Balances of more than $15,000 earn $0.10% APY.

DuPont Community Credit Union, Grow Green Checking

DuPont Community Credit Union offers 2.78% APY on its Grow Green Checking account when 15 debit transactions are performed each month with an amount of at least $250. This rate is capped at balances of over $25,000.

IC Federal Credit Union, Intelligent Checking

Intelligent Checking from ICFCU is a high-yield checking account with no monthly fees. Balances of $0 to $15,000 earn 2.59% APY, and balances over $15,000 will earn .25% APY.

University of Iowa Community Credit Union, Rewards Checking

The Rewards Checking account at University of Iowa Community Credit Union earns 2.50% APY on balances of $0 to $19,999.

Interest Rates from the 5 Biggest Banks

The 20 banks and credit unions above are all local financial institutions, which generally offer much higher yields on deposit accounts than large, national banks. Below is a look at the highest deposit rates from the nation’s five largest banks by holding company asset size for comparison. Chase has the highest rate of just 0.55% APY, which is only available by locking into a long-term CD of five years.

About This Study

Data was compiled from the GOBankingRates interest rate database, which in partnership with Informa Research Services Inc., aggregates banking and interest rate information belonging to more than 6,000 U.S. banks and credit unions.

GOBankingRates surveyed interest rates for more than 26,700 deposit accounts offered by banks and credit unions in the United States, as of April 1, 2014, with an assumed deposit of $10,000. Rates belonging to online-only institutions were omitted.

Please note that interest rates are subject to change at any time at the discretion of individual banks and credit unions. Other terms and conditions may apply in order to obtain the rate listed. Although the information has been obtained from the various financial institutions, Informa Research Services cannot guarantee the accuracy.