By Andrew Shilling
There are, of course, caveats to this CD. Here's what's in the fine print.
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I spend a lot of time researching CDs these days, and I can tell you one thing: Many of the best offers have strings attached. For example, for a few months, Alpena Alcona Area Credit Union had a CD that was offering a major 7.19% APY -- but it was only for its 7-month CD and it only applied to balances up to $7,000. And Truliant Federal Credit Union has a handsome 6.25% APY for an 11-month CD, but you have to bring at least $5,000 of new money to get started. See some of the best CD rates you can get now here.
When I came across Credit Human's new 6% APY CD, there was more to like: You get that 6% APY on a 12- to 17-month share certificate. One of the only restrictions is the required base deposit of just $500 to get started, and there is no account maximum. That said, there are geographic requirements that are pretty strict (though we have a way you may be able to get around that).
What's the deal with the Credit Human CD?
Simply put, Credit Human members stand to earn an industry-leading 6% APY on a 12- to 17-month share certificate. While many CDs require big opening deposits to get started, one of the only restrictions for the CD at Credit Human is the required base deposit of $500 to get started, according to the fine print. There is no account maximum; however, like with most credit unions, account holders here are only insured up to $250,000 by the National Credit Union Administration, or NCUA. You can see the details of the Credit Human 6% APY CD here.
Unlike opening a CD at a bank, most credit unions -- Credit Human included -- require depositors to become a member to take advantage of this high rate. In this case, prospective depositors must either live, work, worship or attend school in Credit Human's designated service areas in San Antonio or New Orleans. Other ways to join include studying at one of a select number of trade schools, colleges or universities or by having a family member who is also a current member.
If that had you at a full stop, we have another way to get in: New members may be able to join through the American Consumer Council (ACC) -- a non-profit dedicated to consumer education, advocacy and financial literacy -- if you live in the United States. If you choose to go this route, the credit union says it will share your contact information with the ACC and cover any required fees to help set up an account (an individual lifetime ACC membership is regularly $15, while business accounts run a little higher at $79). For those living in Louisiana, Credit Human will also help you enroll in the Louisiana Consumer Council (LACC), as an alternative. After agreeing to join either the ACC or LACC, you can then sidestep these geographic restrictions for simply agreeing to receiving some additional consumer education.
In addition, new members will also be required to open a primary share savings account. This, however, is fairly simple and can all be done at the time of registering a new account. Just be prepared to bring the minimum $5 to open an account. There are also no monthly fees here and the maximum deposit restriction of $1,000. That said, this savings account only delivers a fairly standard 0.70% APY. You can see the details of the Credit Human 6% APY CD here.
What to look for?
Beyond just a good rate, there are a lot of other things to consider when buying a CD. Make sure the bank or credit union is insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).
This point, says Catherine Valega, a certified financial planner at Greenbee Advisory, is one of the most critical considerations potential depositors should look for when working with a bank or credit union.
She adds that you also must know about "penalty fees for early CD redemption," Valega says. Known commonly as early withdrawal penalties, these fees typically kick in for depositors who withdraw their invested principal or interest prior to the previously agreed upon maturity date. A CD with a maturity date of six months or more may charge the equivalent of three month's interest while longer-term CDs may charge as much as 12 months interest or more, according to Investopedia.
Avoiding these fees, Valega says, is pretty simple. "Hold for the term and get the rate that applies to that term," she explains, adding, however, that for depositors who redeem their interest or principal before the set maturity date then "you typically lose a few months interest as a penalty."
Read the details
When it comes to fees, like most CDs, this one also includes early withdrawal penalties for depositors who take their money out prior to the previously stated maturity date. While there are no details on the company website about how much these fees amount to, the credit union states that "a penalty will be imposed for early withdrawal, including substantial penalties on tax-deferred instruments," and that "fees could reduce earnings."
Something else to watch out for here is automatic renewal at the end of the term. That means, when your 12- to 17-month CD maturity date, the credit union will automatically start a new term.
In short, read the fine print on your CD before signing up for it. And know that if you need more liquidity with your money, a high-yield savings account may be more up your alley. See some of the highest savings account rates you can get now here.
-Andrew Shilling
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10-13-23 0625ET
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