Why Are Some Credit Unions Raising Savings Rates?

Rising rates for mortgages and auto loans have helped credit unions increase their net interest margins this year.

Now, they’re starting to reward members with higher rates on savings.

CUNA data showed interest rates for new cars rose 62 basis points to 3.75% from December to August, while rates for regular shares fell 1 bps to 0.11%. NCUA data showed the nation’s 4,957 credit unions held $1.87 trillion in savings on June 30, up 8.4% from a year earlier, while the number of share accounts rose 4.4% to 259.1 million. The average balance rose 3.8% to $7,234.

With expectations of further stiff rate hikes by the Fed this year and the U.S. Bureau of Labor Statistics reporting another inflation surge in September on Thursday, some credit unions were announcing increases in their savings rates.

Alliant Credit Union of Chicago ($16.4 billion in assets, 694,474 members) on Thursday raised its savings dividend to a 2.20% average percentage yield (APY). Monthly dividends are paid to members who have maintained an average daily balance of $100 or more. Alliant held $13.1 billion in savings on June 30, up 9.8% from a year earlier. The average balance fell 0.5% to $12,221.

Los Angeles Federal Credit Union ($1.3 billion in assets, 73,434 members) on Wednesday announced it was offering a special “Triple Your Savings” share savings certificate at 3.33% APY for 33 months. It can be opened with a balance of $500 to $250,000 from Oct. 12 to Nov. 30. LAFCU held $1.1 billion in savings on June 30, up 4.9% from a year ago. The average balance rose 1.7% to $9,252.

Pelican State Credit Union of Baton Rouge, La. ($604.9 million in assets, 71,467 members) announced Thursday it had raised its maximum APY on its Kasasa Cash rewards checking account to 5.11% and the maximum APY on its Kasasa Saver savings account increased to 1.00% APY.

The higher rate applies in any month that a Pelican State member meets four tests:

• Makes 15 debit card point-of-sale purchases in the month;
• Has a direct deposit, ACH debit or credit, or Bill Pay transaction posted to their Kasasa Cash account;
• Accesses online or mobile banking at least once in the month; and
• Receives their monthly statement electronically.

“The requirements needed to earn rewards are easy,” a Pelican State news release said. “Even if members don’t qualify during a period, they can try again the next month and they’ll still earn 0.05% APY.”

Pelican State held $528 million in savings on June 30, up 0.4% from a year ago. The average balance fell 4% to $3,968.

Oregon Community Credit Union of Eugene ($3.2 billion in assets, 249,751 members) sent out a news release Thursday publicizing its Remarkable Checking account, which provides a 1% APY on balances up to $20,000, and its Ignite Savings account.

“The Ignite Savings account works under an inverted-tier system: Smaller amounts of money in the account generate greater APY,” its news release said. “The first $500 earns a full 5.25% APY, and the yield decreases for each additional level of the balance. In this way, Ignite Savings encourages members to save, especially if they’re starting small.”

OCCU held $2.6 billion in savings on June 30, up 12.3% from a year ago. The average balance fell 5.1% to $5,952.