bank rates

1-Year Account Pays 3%? Yes, But …

hand reaching for pile of moneyHanscom Federal Credit Union is offering an unusually high interest rate – 3.00% APY – if you contribute $5 to $500 per month for one year to a CU Thrive certificate of deposit.

That’s almost 2 percentage points above the top one-year CD deal on our CD Rates Leaderboard and far above the 0.24% APY national average.

However, the opportunity for savings is dramatically reduced by the maximum deposit and the monthly transfers.

At the end of 12 months, you’ll have saved $6,000 and earned $98.40 in interest.

If you put $6,000 aside in a regular 12-month CD, you’d have to earn 1.63% APY to get a similar return.

Savers nationwide are eligible for this deal, as membership in this credit union is easy to obtain.

If you have an existing relationship with the Massachusetts-based credit union through an immediate family member, your employer or the military, membership is free.

If not, you can pay to join one of the credit union’s sponsoring organizations.

The simplest and least expensive choice is the Nashua River Watershed Association for $35.

The problem is that this $35 fee effectively reduces your return to $63.40.

If you put $6,000 into a one-year CD paying the top rate of 1.05%, you’d earn $63.33.

So why bother with this deal?

If you sign up through a member’s referral link, you’ll get $30 after your account has been open for 90 days (they’ll get $30, too). Now you’re looking at a $93.40 return.

There is a limit of one CE Thrive account per member, but you could also open an account for your spouse, who won’t have to pay to join since they’re related to an existing member.

If you first sign up to become a referral partner at www.urefer.com/hanscom/register and your spouse opens an account through your referral link, you and your spouse will each get $30.

They could earn another $98.40 for your household, assuming you have another $500 a month to contribute.

Now your household return is up to $251.80 on a $12,000, 1-year investment.

To get a return like that, you’d have to find a one-year CD paying 2.08% APY, but in today’s market you’d need a 5-year CD to get a rate that high.

You can open your account online at www.hfcu.org, by calling 800-656-4328 or by visiting a branch.

You’ll need to open a PrimeShares account, the basic account required for credit union membership.

It’s like a savings account and requires a $25 minimum deposit.

You’ll also need to open a Hanscom FCU checking account, which is free, lets you deposit checks online and offers free foreign ATM transactions.

It doesn’t pay interest, but you get 10 free ATM transactions per month at 100,000 ATMs nationwide (some even accept deposits).

You can open a Thrive CD account at the same time. It requires no initial deposit.

Then, you must set up automatic monthly transfers of $5 to $500 from your Hanscom checking account to your Thrive CD account.

To maximize the interest you’ll earn, schedule your entire contribution for the beginning of each month.

Unlike most CDs, this one does not renew automatically at the end of its term.

Instead, all of your principal and interest will be transferred to your PrimeShares account.

This is a solid 1-year investment for someone with a modest amount of money to invest.

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