Why are some credit unions increasing savings rates?

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Rising mortgage and auto loan rates have helped credit unions increase their net interest margins this year.

Now they are starting to reward members with higher savings rates.

CUNA data showed that interest rates for new cars rose 62 basis points to 3.75% from December to August, while common stock rates fell 1 basis point to 0.11%. NCUA data showed the nation’s 4,957 credit unions held $1.87 trillion in savings as of June 30, up 8.4% from a year earlier, while the number of Equity accounts rose 4.4% to 259.1 million. The average balance increased by 3.8% to $7,234.

With the Fed expecting further interest rate hikes this year and the U.S. Bureau of Labor Statistics reporting another surge in September inflation on Thursday, some credit unions announced increases in their savings rates.

Chicago’s Alliant Credit Union ($16.4 billion in assets, 694,474 members) raised its savings dividend Thursday to an average percentage yield (APY) of 2.20%. Monthly rebates are paid to members who have maintained an average daily balance of $100 or more. Alliant held $13.1 billion in savings as of June 30, up 9.8% from a year earlier. The average balance decreased 0.5% to $12,221.

The Los Angeles Federal Credit Union ($1.3 billion in assets, 73,434 members) announced Wednesday that it is offering a special “Triple Your Savings” stock savings certificate at 3.33% APY for 33 months . It can be opened with a balance of $500 to $250,000 from October 12 to November 30. LAFCU held $1.1 billion in savings as of June 30, up 4.9% from a year ago. The average balance increased 1.7% to $9,252.

Pelican State Credit Union of Baton Rouge, Louisiana ($604.9 million in assets, 71,467 members) announced Thursday that it has increased its maximum APY on its Kasasa Cash rewards checking account to 5.11% and l Maximum APY on his Kasasa Saver Savings Account increased to 1.00%APY.

The higher rate applies each month a Pelican State member meets four tests:

  • Make 15 debit card point-of-sale purchases in the month;
  • Has a direct deposit, ACH debit or credit, or Bill Pay transaction recorded in their Kasasa Cash account;
  • Accesses online or mobile banking services at least once a month; and
  • Receives monthly statement electronically.

“The requirements for earning awards are simple,” said a press release from Pelican State. “Even if members don’t qualify for a period, they can try again the next month and they will still earn 0.05% APY.”

Pelican State had $528 million in savings as of June 30, up 0.4% from a year ago. The average balance decreased 4% to $3,968.

Oregon Community Credit Union of Eugene ($3.2 billion in assets, 249,751 members) issued a press release Thursday advertising its Remarkable Checking account, which provides a 1% APY on balances up to $20,000, and his Ignite Savings account.

“The Ignite Savings account operates on a reverse tier system: smaller amounts of money in the account generate higher APY,” its press release reads. “The first $500 earns a full 5.25% APY, and the return decreases for each additional level of balance. This way, Ignite Savings encourages members to save, especially if they are starting small.

The OCCU held $2.6 billion in savings as of June 30, up 12.3% from a year ago. The average balance decreased 5.1% to $5,952.