While credit union CDs and commercial bank CDs are more similar than not, key differences include some terminology, interest rates, providers, and who each is available to.

Credit Union CDs vs. Bank CDs: An Overview

CD rates are generally higher at credit unions than at banks, on average. Of course, you may find the best CD rates at various institutions, including banks.

However, banks offer CDs to anyone interested—you don't need to bank at the institution. A credit union may only offer CDs to members and may also use different words to describe CDs and interest paid.

Both credit union and bank CDs are insured for up to $250,000, although by different entities.

Other than these differences, most certificates work similarly. When you put your money into a traditional share certificate, you commit to leaving cash in the account for a set period.

In exchange, the issuer pays a higher interest rate than standard savings accounts. Taking money out before the end of the CD's term could lead to an early withdrawal penalty, sometimes a substantial one.

Taking money out before the end of the CD's term could lead to an early withdrawal penalty, sometimes a substantial one.

	Credit Union CDs	Commercial Bank CDs
Called	CDs, Share Certificates	CDs
Pays	Dividends	Interest
Interest Rates	Higher	Lower
CDs Insured By	NCUA	FDIC
CD Availability	Members	Broader public
Joining Fee	Sometimes	No

Credit Union CDs

A credit union CD may be called a share certificate, depending on the credit union. At a credit union, the interest paid may be called a "dividend" instead of interest.

Credit unions may offer better dividends or interest rates on CDs. A 2023 comparison of bank and CD rates found that a credit union's national average interest rate was higher for $10,000 in CDs ranging from three months to five years.

Share certificates and CDs at federally insured credit unions are covered by the National Credit Union Administration (NCUA). Congress created the National Credit Union Share Insurance Fund to insure credit union member’s deposits up to the $250,000 federal limit.

Finally, credit union CDs may only be available to credit union members. Qualifying for membership means falling within the field of membership, which could be a common employer, geographic location, group membership or being related to another member.

However, some credit unions are open to a wide field of membership, with easy ways to join, such as donating to a specific nonprofit organization.

Commercial Bank CDs

A commercial bank pays interest on its certificate of deposits. CD rates, on average, are lower at commercial banks versus at credit unions.

Bank CDs are federally insured for up to $250,000 by the Federal Deposit Insurance Corporation (FDIC) if that institution fails. Congress also created the FDIC to help maintain stability and boost public confidence in the nation's financial system.

Unlike credit unions, banks may offer CDs to just about anyone. You typically don't have to qualify in some special way to sign up for a CD account beyond presenting the ID required.

The Bottom Line

A typical certificate of deposit (CD) works in much the same way whether it is issued by a bank or a credit union. Choosing between the two types of financial institutions is largely a matter of personal preference and whether you qualify for a credit union's membership, although it's wisest to shop around for a competitive interest rate and compare fees.