Melrose Credit Union CD Rates Review
When you have a long-term savings goal, where you keep your money matters. The longer your savings stays put, the more potential it has to grow over time if you’re earning interest.
A savings account may seem like the most obvious choice. But you may want to cast the net wider and consider whether a certificate of deposit makes more sense.
CDs can be good for long-term savings goals because they may have a higher annual percentage yield than a regular savings account. That means more interest earned for you. And, they’re secure. That means you won’t lose any money in the bargain.
Most banks offer CDs but you can also find them at credit unions. Credit unions can have an edge over traditional banks when it comes to cost and interest. They may charge fewer fees and give better rates on deposit accounts because they have a low overhead.
This makes them similar to online banks with one key difference: credit unions typically require you to meet some kind of membership requirement to join and open a savings or CD account.
Melrose Credit Union opens up membership on a broader scale. Based in Queens, New York, this credit union has an open New York State charter with no geographic or group affiliation required for membership. Anyone who can pay the $1 one-time membership fee and make a minimum initial deposit of $25 may be eligible to join.
For savers, Melrose Credit Union offers share certificates for reaching long-term goals. Learn how these CDs work and whether they’re a good choice for you.
Melrose Credit Union Share Certificate Rates
When it comes to saving, the most important thing you might be concerned with is earning interest. The higher your APY, the better but every bank and credit union structures rates differently.
At Melrose Credit Union, the APY and corresponding interest rates for CDs are tiered, based on how long you’re saving for. The CD terms range from 9 months to 5 years. The rates don’t hinge on how much you actually save. If you choose a 3-year CD, for instance, you’d get the same APY for saving $5,000 as you would for saving $50,000.
The real question is, how do Melrose Credit Union’s rates compare to what other banks offer for CDs? Overall, Melrose is in the upper range and the rates are very competitive, even compared to what of the most popular online banks are offering. That’s a hallmark of how credit unions operate and part of what makes them attractive to their customers. Against brick-and-mortar banks, credit unions are hard to beat and Melrose’s CD rates are no exception. They’re substantially higher than what the nation’s largest banks offer for CD savers.
Withdrawing Your CD Savings
There’s one important difference to understand about CDs versus savings account. With a savings account, you can more or less access the money whenever you need it. You are, however, limited to six withdrawals per month according to federal Regulation D.
CDs are different. A CD is a time investment so when you open an account, you’re committing to saving your money for a set term. Once the term expires, you can collect your initial deposit, along with the interest you’ve earned.
Withdrawing money before the CD reaches maturity can trigger an early withdrawal penalty. The penalty depends on the length of your CD term:
- 9- or 12-month CD: 90 days of interest
- All other CD terms: 180 days of interest
Interest can be withdrawn without penalty at any time during the period when it was earned. Melrose compounds interest on CDs quarterly. But, you have to withdraw all the interest earned. If you only take out part of your interest earnings, it’s still treated as an early withdrawal and subject to the penalty.
The penalty is waived when an early withdrawal is due to the death of the CD owner. There’s also a waiver if you’re making a required minimum distribution from an IRA CD. We’ll get into how those work a little later on.
Melrose Credit Union CD Minimum Deposit Requirements
The minimum deposit to join Melrose Credit Union is low but you’ll need more cash to set up a CD account. The minimum deposit for any CD, regardless of the term length, is $5,000. It’s $4,000 for IRA CDs.
At a glance, that may tell you whether this CD is a good fit or not. If you don’t have at least $5,000 to save, you may want to look for CDs at another credit union or bank.
Melrose doesn’t specify a CD savings maximum, but take note of deposit insurance coverage. Deposits are insured up to $250,000 by the National Credit Union Administration. This is the same as the FDIC insurance coverage that applies to banks. If you have a larger CD, or more than $250,000 spread across multiple CDs, not all of your savings may be covered.
Saving for Retirement With IRA CDs
An IRA is an individual retirement account. There are two kinds: traditional and Roth. The traditional IRA allows for tax-deductible contributions. Your savings are taxed when you withdraw them in retirement. Roth IRAs don’t give you a deduction but your withdrawals are tax-free.
IRAs have annual contribution limits. For 2018, the limit is $5,500, plus another $1,000 if you’re 50 or older. An IRA CD applies all these rules to a CD.
Melrose Credit Union does offer IRA CDs if you have at least $4,000 to get started. The term lengths are the same, nine months to five years. The interest rates are also the same. So why would you choose an IRA CD instead of a regular CD?
Two reasons. One, IRA CDs can yield tax benefits. If you choose a traditional IRA CD, being able to deduct what you contribute could lower your tax bill. And if you’re in a higher tax bracket at retirement, not having to pay taxes on Roth IRA CD withdrawals can be a big help.
The other reason is safety. With a regular IRA offered by a brokerage, you’re investing in stocks, mutual funds or bonds. Bonds are usually a safe bet but stocks and mutual funds can carry more risk. An IRA CD gives you a stable (albeit lower) rate of return, with tax benefits to boot.
What Happens When Your CD Matures?
As your CD approaches its maturity date, you have to decide what you’ll do with the money. There are two basic choices: withdraw your savings and interest or roll it all over into a new CD.
At Melrose, CDs are automatically renewed for another term once they mature. The renewal term is the same as the initial term, although the interest rate can go up or down. Renewal notices are mailed out approximately 30 days before the CD matures, so you have time to make a decision.
Some banks and credit unions offer a grace period for withdrawing CD funds after the renewal period begins. Melrose doesn’t specify whether a grace period exists, so to be on the safe side, you’d want to decide ahead of time whether or not to renew. If not, you could transfer the money into another Melrose Credit Union account or to an account at a different financial institution.
Melrose Credit Union vs. Competitor CD Accounts
The great thing about CDs is that there are so many of them to choose from. That can be a drawback, however, if you’re not sure what to consider when comparing your CD options.
As you look at how Melrose Credit Union stacks up against other banks or credit unions, remember to consider:
- CD rates - How good are the interest rates overall? Are the rates tiered by balance or by term? Is there any kind of rate bonus for being an existing customer?
- Maturity terms - What are the different maturity terms available? How do those terms fit with your savings goals? Is there a penalty if you have to break into your CD before the maturity date?
- Availability - With an online bank or a credit union that has no membership restrictions, anyone may be able to open a CD account. Other banks or credit unions, however, may set limitations on who can set up a CD.
- IRA CD option - This is something to keep in mind if you’re looking for a retirement savings option. Just as with regular CDs, you’d want to compare the rates and maturity terms.
Can a Melrose Credit Union CD Help You Reach Your Savings Goals?
You may have never heard of Melrose Credit Union but they’re definitely worth a look if you want a CD big interest-earning potential. The rates for CDs are some of the highest around.
But, if you’re not comfortable being locked into at least a nine-month CD term, we’d suggest looking at other banks for shorter-term savings options. Online savings accounts are always a great option for liquid savings.
More: Best CDs of the Year