Community banks, on average, outperform credit unions in interest rates offered on CDs, according to new research.

GoBankingRates.com published this finding in a new interest rate study, which explores whether local banks or credit unions consistently provide higher-yield options. The report surveyed more than 10,000 6-month, 1-year and 2-year CD rates from financial institutions across the U.S.

To arrive at its conclusion, the study first averaged across each term interest rates of all financial institutions in GoBankingRates' database:

CD Term:                     Average Rate (Banks and CUs)

6-Month CD:                 0.30% APY

1-Year CD:                   0.44% APY

2-Year CD:                   0.65% APY

When broken down by institution type, however, average local bank rates are slightly higher than credit union rates for two of the three certificate of deposit terms included in the study:

CD Term:                     Average Bank Rate;  Average Credit Union Rate

6-Month CD:                 0.31% APY;                  0.29% APY

1-Year CD:                   0.44% APY;                  0.45% APY

2-Year CD:                   0.66% APY;                  0.65% APY

In both the 6-month CD and 2-year CD categories, local banks averaged the higher rates, "contrary to the popular belief that not-for-profit institutions outperform banks significantly when it comes to interest rates on deposit accounts," the survey states. Credit union interest rates were higher for 1-year CD rates only.

GoBankingRates Managing Editor Casey Bond notes these differences in rates are by hundredths of a percent in each case.

"Interest rates on deposit products like savings accounts and certificates of deposit are already so low across the board that these minor variations are negligible when it comes to earning interest," Bond sales. "Depositors will not experience any noticeable gain or loss on funds deposited in, for instance, a 6-month CD with a rate of .29% APY versus .31% APY.

"What the data tells us is not that local banks are superior to credit unions, but rather that they are just as competitive in terms of CD rates," she adds.

The study concludes that CD rates from local bank rates are so close to credit union rates that there is no discernible benefit to choosing one over the other for savers who are simply looking to maximize their returns. Bond advises local depositors to "investigate all of the savings options available within your city, including both credit unions and community banks in your search."

The interest rates used in the study are accurate as of April 30, 2013 and come from GoBankingRates' database of more than 4,000 U.S. banks and credit unions. GoBankingRates manually collects and updates these rates regularly, and rates are based on institutions' online published rates.

 

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