Over the past few years, Americans have gotten used to earning paltry interest on their bank deposits. But the news the Federal Reserve will finally hike the federal funds rate (which hasn’t budged since 2006) probably has some consumers anticipating an end to the long, dreary era of sub-1% returns on most checking and savings accounts.
Not so fast, say economic experts.
“Savers shouldn’t expect much if any improvement right away,” Greg McBride, the chief financial analyst for Bankrate, said. “Many banks are sitting on a pile of deposits already and won’t need to raise rates to bring more in the door.”
Instead, consumers should steel themselves for continuing low interest rates on checking, savings, and CDs, at least in the immediate future. But that doesn’t mean there aren’t a few financial institutions offering better returns than those you can get at your average big bank. The trick is finding them.
“Sitting back and waiting for better savings returns to come to you is a recipe for disappointment,” McBride said. “You’ll have to go out and find it. Check the online banks, community banks, and credit unions that are already paying the highest returns as they are more likely to boost rates and remain competitive.”
Credit unions – non-profit financial institutions owned by their members – are an especially good bet for those looking to get more out of their deposits. When GoBankingRates combed through its database to find the highest rates currently available on checking, savings, and certificates of deposit, the top 10 accounts were all at credit unions.
“Credit unions and local banks really offer the best of both worlds to their customers,” Elyssa Kirkham, lead reporter on the study, said. “These accounts often have low fees, or no fees, while delivering some of today’s best returns on deposits.”
The only catch with credit unions is that not just anyone can join. Membership is often restricted to people who live in a certain geographic area or work for a particular employer. While you may not necessarily be able to take advantage of a particular credit union’s great deal, one in your area might offer a similarly strong promotion.
Here are the 10 best rates on deposits you can find as of December 2015, according to GoBanking Rates.
10. 5.01% APY, SAC Federal Credit Union
SAC Federal Credit Union’s Saver’s Advantage Checking account has no minimum balance, no monthly service charge, and offers an APY of 5.01% on balances up to $1,000. The Nebraska-based credit union’s High-Yield Checking Account offers an APY of 3.01% on balances up to $10,000. You must live in select Nebraska or Iowa counties to open an account.
9. 5.05% APY, Beacon Credit Union
Virginia’s Beacon Credit Union offers a Choice Plus Checking account with a 5.05% APY on balances up to $2,500. Direct deposit is required to qualify. You must also maintain an average daily balance of $300, sign up for e-statements, and make at least 15 debit card transactions per month. Membership is limited to people living in certain cities and counties in Virginia and North Carolina.
8. 5.10% APY, Guardian Credit Union
Guardian Credit Union’s RoundUp Savings account has an APY of 5.10%. The account is a special feature of the Common Cents Checking account. Every purchase is rounded up to the nearest dollar and the difference deposited in a savings account. To qualify for credit union membership, you must be active or retired Alabama Army or Air National Guard or live in an eligible Alabama county.
7. 6% APY, Georgia Heritage Federal Credit Union
The E-Account Checking at Georgia Heritage Federal Credit Union has an APY of 6% on balances up to $500. You must live, work, or attend religious services or school in Chatham, Effingham, or Bryan counties in Georgia to open an account.
6. 6.02% APY, Gateway Metro Federal Credit Union
An E-Hanced checking account at Gateway Metro Federal Credit Union in Missouri has an APY of 6.02% on balances up to $1,500. The credit union also has a Youth CD for kids between the ages of 10 and 17; it has a 10% APY on balances up to $1,000. Membership is open to people living, working or doing business, or attending school or church in St. Louis and the surrounding area, as well as family members of current members.
5. 7% APY, Community West Credit Union (tie)
Open a checking account with Community West Credit Union and you’ll earn 7% on balances up to $2,000. To qualify, you must have monthly direct deposits of at least $200 and actively use your debit card. To open an account, you must live or work in Allegan, Barry, Ionia, Kent, or Ottawa County in Michigan or be an immediate family member of a current member.
5. 7% APY, Schools Financial Credit Union (tie)
Schools Financial Credit Union pays 7% on the first $500 in a Banking for Everyone Savings Account. To join the credit union, you must live in Sacramento or the surrounding area, work at a California school, be a student or member of an alumni association at a California college or university, or fall into another eligible group.
3. 7.5% APY, Landmark Credit Union
You’ll earn 7.5% on balances up to $500 when you open a Premium Checking Account at Landmark Credit Union. Direct deposit is required. You must live in southern or northeastern Wisconsin or northeastern Illinois to open an account.
2. 7.52% APY, O Bee Credit Union
Earn 7.52% on balances up to $500 with an O Bee Credit Union savings account. To get the rate, you’ll need to make monthly direct deposits of at least $100, use your debit card three times a month, or be under age 18. Anyone who lives, works, or worships in Washington State can open an account.
1. 10% APY in Ohio from Bridge Credit Union
A double-digit interest rate on a checking account might seem unbelievable, but it’s reality at the Ohio’s Bridge Credit Union, where members with Diamond Dividend Checking accounts earn 10% on balances up to $1,500. To open an account, you must work with the Ohio Department of Transportation or certain other organizations.