Some Credit Unions Turn to High-Yield Drafts

Rates might soon start falling, but credit unions are still paying more to keep and build their deposits.

Some credit unions are responding with high-yield checking accounts, including Skyla Federal Credit Union ($1.57 billion in assets, 103,469 members as of June 30) of Charlotte, N.C.

Skyla, which changed its name from Charlotte Metro Federal Credit Union in 2022, announced Monday it had launched its Simply Prosper Checking Account, which offers a 4.00% APY on balances up to $25,000.

“This type of high-yield return is typically reserved for CDs and savings accounts but is now open to everyone in the form of a checking account. Best of all, the rate is permanent, with no monthly fees or minimum balance requirements,” it said in an email to CU Times.

Requirements on these types of offers differ. At Skyla, it requires members to enroll in eStatements, use their Skyla debit or credit card at least 20 times a month and have a direct deposit of at least $500 a month.

Skyla’s move came as regular shares and drafts have become a smaller part of total savings among credit unions.

NCUA data gathered in Callahan’s Peer Suite showed Skyla’s share and draft balances have fallen faster and its higher-cost savings have risen faster than average among credit unions in the past year:

• Skyla’s drafts fell 3.8% to $241.2 million as of June 30, while the average 12-month drop among all credit unions was 2.1%.
• Skyla’s regular shares fell 9.4% to $336.6 million, compared with a national drop of 8.2%.
• All other forms of savings at Skyla rose 14.7% to $1.34 billion, while they rose 11.7% nationally.

Among all credit unions, regular shares were 20% of total deposits on June 30, down from 16% five years earlier. Drafts were 29% at the end of June, down from 34% five years earlier.

At Skyla, shares were 25% of deposits in June, down from 26% five years earlier and 29% in June 2023. Drafts were 18% in June, down from 18% five years earlier and 19% in June 2023.

A few of the other credit unions offering high-yield checking accounts were:

• Focus Federal Credit Union of Oklahoma City ($168.7 million in assets, 12,627 members), where drafts were 22% and shares were 43% of total deposits on June 30.
• Canvas Credit Union of Denver ($4.52 billion in assets, 299,383 members), where drafts were 16% and shares were 10% of total deposits on June 30.
• PenAir Credit Union of Pensacola, Fla. ($2.94 billion in assets, 128,886 members), where drafts were 16% and shares were 36% of total deposits on June 30.