Should You Join a Credit Union to Take Advantage of High-Yield Checking?
For many New Orleans banking customers, the answer is likely yes. At OnPath Federal Credit Union, we’ve recently launched an unprecedented 7% APY* high-yield checking account that gives banking customers the chance to earn exceptional interest on the funds they use for everyday expenses.
According to recent FDIC analysis, current average interest rates for typical consumer banking accounts are as follows:
- Savings accounts: 0.45% APY
- CDs: 0.26% to 1.37% APY
- Checking accounts: 0.07% APY
While some banking customers have access to better rates depending on their institution, assets or membership status, they typically won’t find reliable opportunities to grow their money in federally insured, risk-free savings accounts – much less checking accounts.
OnPath FCU is proud to offer this unique opportunity to qualifying members. You can learn more about our high-yield checking accounts here, or call us at 800.749.6193 to learn more about membership eligibility.
You Have a Checking Account Anyways – Why Not Make That Money Work for You?
As of 2021, more people were using debit cards more often for everyday purchases than either credit cards or cash. If you’re like the average consumer, you have a debit card and use it regularly to make payments on everything from groceries to gas.
Checking accounts with debit cards are the ideal option for many New Orleans families. You can make purchases without carrying around cash or racking up high-interest credit card debt. They also prevent you from spending money you don’t have.
The major downside to keeping liquid money in your checking account for everyday purchases is the almost non-existent interest earned by those dollars. While savings accounts and CDs might not offer stellar interest rates compared to more risky investment options like stocks, at least they earn something.
High-yield checking combines the best of both worlds. Not only does the account function just like any other checking account, including having a debit card for easy payments, but the interest your checking account funds earn beat out the vast majority of currently available savings accounts and even certificates of deposit.
What Incentive Do Banks Have to Keep Interest Rates Low?
Banks and financial institutions operate in a competitive environment. Offering higher interest rates on savings and checking accounts can strain their revenue model because they must pay out more to their account holders. This is doubly true for accounts that are ostensibly “free” – like no-fee savings accounts or checking accounts that only require customers to maintain minimum balances to avoid incurring monthly service charges.
For-profit banks are working for investors – not members. At a member-owned credit union, profits are funneled back into making products and services more affordable or lucrative for members. At a traditional for-profit bank, those profits are sent back to owners and investors.
These are two fundamentally different business models run for the benefit of two different groups.
What’s Done with the Money Customers Put in Checking and Savings Accounts?
The funds banks receive from depositors are often reinvested or loaned out at higher rates. By keeping interest rates low on deposits, banks can maintain a wider margin between the interest they earn (on loans and investments) and the interest they pay out on checking accounts, savings accounts and certificates of deposit. This helps them ensure profitability and allows them to meet their financial obligations.
Why Do Credit Unions Often Offer Better Interest Rates?
Not-for-Profit Model: Credit unions are not-for-profit cooperatives. Instead of focusing on maximizing shareholder value, they prioritize member benefits. This often translates into better service and, notably, better interest rates. Never has this been more apparent than with OnPath FCU’s high-yield checking.
Member-Owned: When you join a credit union, you become a member and part-owner. Profits generated are returned to members in the form of reduced fees, better loan terms and higher interest rates on deposits.
Community Focus: Credit unions often serve specific communities or groups. In the case of OnPath FCU, a Louisiana credit union serving the greater New Orleans area, we’ve tailored services to meet the needs of local banking customers and businesses.
The major financial institutions serve the whole country or, in some cases, operate globally. Their business model doesn’t allow them to take a highly localized approach to client services and products.
While you should always bank for you and do what’s in your own financial best interest, many people like the idea of keeping their money local. By being a member of OnPath Federal Credit Union, you’re not getting better interest rates for yourself, but you’re contributing to the superior interest rates and better financial services enjoyed by local businesses and your neighbors.
Take Advantage of Industry-Leading High-Interest Checking Accounts
While high-yield checking accounts might seem like a banking unicorn, they do in fact exist – at least for OnPath FCU members. If you're interested in ditching your current low to no-yield checking account and putting your money to work for you, learn more about OnPath FCU’s high-yield checking. If you’re not already a member or want to learn more about the benefits of banking with OnPath Federal Credit Union, call us at 800.749.6193.
*APY=Annual Percentage Yield. APYs accurate as of 8/1/23. Rates may change after an account is opened. Minimum of $25 required to open a checking account. The following must be met each qualification cycle: (1) Log into online or mobile banking one or more times per qualification cycle (2) Be enrolled in and receive e-statements for the statement cycle, and (3) Have at least 15 debit card purchases post and settle within the qualification cycle. If qualifications are met each monthly qualification cycle for Cash Back checking, members earn 5.0% cash back on up to $200 in debit card purchases for a maximum earning of $10 per month per account. If qualifications are met each monthly qualification cycle for High-Yield Checking: (1) balances up to $10,000 receive APY of 7.00%; and (2) balances over $10,000 earn 0.50% interest rate on the portion of balance over $10,000, resulting in a range of 7.00% - 0.50% APY depending on the balance (3) domestic, out-of-network ATM fees up to $10 per month will be reimbursed on the last day of your qualification cycle. Fees may reduce earnings. If qualifications are not met on High-Yield checking, all balances earn 0.01% APY. Qualifying transactions must be posted to and settle on the account during monthly qualification cycle. Transactions may take one or more banking days from the date the transaction was made to post to and settle on account. ATM transactions do not count towards qualifying debit card transactions. “Monthly Qualification Cycle” means a period beginning one day prior to the first day of the current statement cycle through one day prior to the close of the current statement cycle. Go to www.beonpath.org to view the current Monthly Statement Qualification Cycle. To view our courtesy pay policy, go to www.beonpath.org/courtesy-pay.
* Special services fees, such as stop payment, NSF, etc. do not apply.