Zero point zero one percent APY:  0.01%.  If that’s not about as close to 0.00% APY as the human brain can imagine, then it’s a few synapses shy of it.  In general, this number represents a ballpark figure for how much interest banks are paying out to their account holders these days[1].  And that is why I am currently with a credit union.  That’s correct.  I’m not impressed even with the rates online banks are offering (which are slightly better than brick-and-mortar banks), and so it's no wonder why I’m with a local credit union, where my checking account earns me 3.56% APY annually.  Credit unions are not-for-profit institutions, whereas banks operate primarily for profit.  And the account rates at banks reflect this fact all too clearly.  I was getting peanuts from my bank account until earlier this year, when I decided to pack up for a credit union.  I was sick of a steady diet of peanuts.

Credit Union Benefits

But now I’m happily enjoying my 3.56% APY at my credit union.  This is a number I can live with, because on average the rate of inflation in recent decades has hovered around 3.0% each year, and so my money is at least keeping up with the cost of living, if not surpassing it by a hair. But leave your money in an account not equal to or greater than 3.0%, and you are losing money to inflation.  In other words your money, at least in such a low-yield account, is not growing fast enough to keep up with the rising costs of living expenses.  In contrast, for the month of April of this year, I earned $15 worth of interest on my checking account.  That’s $15 which suddenly appeared in my account from nowhere – a genuinely passive form of income – because my credit union rewards me well for my business.  That’s $180 a year versus who-knows-how-many pennies you might get in a year at a bank.

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Finding The Right Credit Union

Now for those who might be interested in fleeing their bank for a credit union, it seems that it might be a bit of a challenge to locate one that offers rates in the ballpark of 3.56% APY.  Recently, I got together with a friend of mine who lives in one of the larger cities here in my home state of Texas, and we shopped around for high-yielding credit union accounts in that city so that he could leave his big bank and enjoy these kinds of returns, and what did we find?  Not a single institution within this larger metropolitan area offers anything near this yearly rate.  I was astonished.  In a city with over a million people, how was it that there was no equivalent to this little not-for-profit organization in my city of about 300,000 that offered such great rates? 

 Whatever the reasons, there is still hope for those who might not find in their local areas a credit union which offers higher account rates.  There is at least one service online that allows you to “bank” with credit unions across the country, no matter where you happen to live[2].  This same service works also with community banks as well as credit unions, and gives both kinds of institutions the title of  “provider”.  You can choose from among the various providers, and in general both checking and savings account are free.  Doing a little digging myself on the service’s site, I found a credit union in Louisiana that offers rates even higher than those that I currently enjoy:  4.01% APY.  Wow.  If you want to get outstanding returns for the money you leave in your checking and savings accounts, go online and Google “credit union 4.01% apy”, and you should see some results that might interest you.  

Conditions For Receiving High Yields

But there’s a single caveat:  there are often conditions that you must meet in order to get great rates like 3.56% and 4.01%, conditions that are put in place not by the online service(s) but by the individual credit unions themselves.  One such condition that seems to be common is that you must have at least one direct deposit or ACH debit post and clear in your account each and every month.  You could always ACH funds from another of your accounts into your credit union account, but this often involves a fee.  This condition is usually met by an employer directly depositing your paycheck into your account.  However, not all employers offer this convenience, and my current employer is among those who do not offer it.  Talk about a brick wall in the way of greater returns.

Through The Wall

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If your employer doesn't do direct deposits, you might be able to pull a neat trick in order to bust through the wall.  It’s a clever maneuver that takes a few minutes of your time each month, but it gets the job done, is free (unlike an ACH from one account to another) and best of all it gets you the high annual yield.  The process goes a little something like this.  Once a month, have some business entity (other than your employer) with whom you do business with and with whom you have an account online (an investment company, or a company that pays you for any work you do, or that acts as a middle man for your money)  -- have that same business entity make a temporary deposit of a few cents into your account by requesting that your checking or savings account be linked to your account at the business entity.  The amount(s) of the deposit(s) you will then report back to the entity in order to confirm your bank information.  If you've already verified your checking/savings account with said business entity, then delete your bank info and re-enter it, an action that will flag the system, initiating yet another temporary deposit into your account.  

 For example, if I want my investment fund and my checking account to have mutual access to each other so that I can transfer funds to and from both accounts, I simply provide my bank information (in my case credit union information) to my investment company by logging into my account on the investment company’s site and filling out various text fields.  But verification of the bank is required, and so the investment company temporarily deposits two small amounts (a matter of cents) into my checking account, amounts which I then report to the investment firm by logging on to my account and entering the amounts in the appropriate text boxes.  The deposits are enough to qualify, in the eyes of my credit union, as two genuine ACH deposits.  For those who may not have an account at an investment firm, you can go to sites such as PayPal, set up a free account, link your credit union account to your PayPal account, and then verify your checking/savings account information by selecting the “make two small deposits” option.  This should do the trick for you and satisfy this particular condition that many credit unions require to reward you with higher account yields.  

Wrapping It Up

In summary, do business with credit unions to get higher rewards for your money.  If you cannot find a credit union that offers high yields, head online and Google your way to the online services that allow you to “bank” at credit unions across the country.  With one or more of these services, you’re almost sure to find the rates that will keep your head above the waters of inflation.  Finally, once you're with a credit union, if you don't qualify for the higher yields because your employer refuses to do direct deposits of your paycheck, then have someone else who is able to deposit to your account make one or more ACH deposits to that account for free by requesting a confirmation (or re-confirmation) of your checking/savings account.  You may or may not have to delete and re-enter your bank information, but follow this procedure and you are certain to enjoy fatter interest rates on your cash accounts.  Now here is to your financial peace and prosperity. 

Happy banking!