The Navy Federal Credit Union (NFCU) has been serving active and retired members of all branches of the United States military, as well as their families since 1933. Today, it offers its members a variety of certificate of deposit (CD) accounts with an annual percentage yield (APY) as high as 5.30%, which is competitive with even the strongest options at some online banks.
You can open a CD for as little as three months or as long as seven years. The longer you invest, the higher your interest rate will climb.
However, this credit union’s options work a bit differently than your standard CDs issued by banks. These pay out interest in dividends, which the NFCU defines as earnings among its members which have been set aside for reserves after all expenses have been paid. You may owe taxes on your CD’s dividends depending on your individual financial situation come tax season.
To calculate how much interest you could earn with a CD, try using SmartAsset's CD calculator.
Share Certificates
Share Certificates are the Navy Federal Credit Union’s standard CDs, and you can open an account for terms ranging from three months to seven years with a minimum deposit of $1,000. Generally, interest rates increase the longer you invest in these options. However, the credit union also offers one special Share Certificate option with a minimum deposit of $50. The featured 12-month Special EasyStart Certificate boasts a 5.30% APY, which could decimate rates at some other financial institutions.
But with its array of options, you may benefit from setting up a CD ladder. This means you open multiple accounts with different term lengths. This strategy guarantees penalty-free access to your principal plus a little bit of interest at different periods in time.
The dividends on these CDs, as with other options by the NFCU, is compounded daily and credited monthly. This means your interest earns interests every day before it’s deposited into your account each month. At this point, you can take those dividends out penalty free.
| Shared Certificate | APY With Balance $1,000-$19,999 | APY With Balance $20,000-$99,999 | APY with Balance of $100,000+ |
| 3 Month | 2.75% | 2.75% | 2.80% |
| 12 Month | 4.80% | 4.80% | 4.85% |
| 18 Month | 4.50% | 4.50% | 4.55% |
| 24 Month | 4.20% | 4.20% | 4.25% |
| 3 Year | 4.00% | 4.00% | 4.05% |
| 5 Year | 3.80% | 3.80% | 3.85% |
| 7 Year | 3.80% | 3.80% | 3.85% |
IRA Certificates
The NFCU also allows its members to park their retirement savings in an option that combines the tax benefits of an individual retirement account (IRA) and a CD or an IRA CD. In this vehicle, your earnings grow tax-free until you make a qualified withdrawal.
You can open an IRA Certificate with the NFCU for anywhere from three months to seven years. The interest rates on these options, however, are currently identical to those found in their corresponding Share Certificates. So a 7-year CD would pay an interest rate of as high as 3.80% whether it’s a Share Certificate or an IRA Certificate. And while the standard CD rates for those can be high and competitive with those of other credit unions and banks, they might not be as high as one would want to aim for when saving for a retirement that’s projected to be a long way down the road.
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ESA Certificates
If you’re saving for your child’s future college education, you may be interested in opening a Coverdell Education Savings Account (ESA) Certificate. This account features the benefits of a Coverdell ESA, which means that your earnings will be tax-free when you withdraw it to cover qualified higher education expenses such as tuition.
However, the interest rates for these options also reflect those of the Share Certificates. So, they may not be the most viable options if your children have a long road ahead before stepping into their first college class. In addition, you can take advantage of numerous college savings plans out there that may offer better benefits.
Compare Navy Federal Credit Union to Other Competitive Offers
Special CDs
The NFCU also offers a range of CDs designed for members new to investing in CDs, as well as those willing to take their chances with options that may increase their interest rates over time.
Those not familiar with investing in a CD may find the SaveFirst Account appealing. You can open one with as little as $5, which is extremely rare in the CD market. Its term length can stretch from three months to five years. This option may give you the chance to test the CD waters to see if you’re comfortable with locking up your money for a set amount of time in exchange for earned interest.
EasyStart Certificates function similarly. However, the minimum deposit for this CD is $50, and it’s only available in a 12-month term. You can open an EasyStart Share, IRA or ESA Certificate under those terms. The table below explains your options in more detail.
In addition, you can invest in variable Share, IRA or ESA certificates. For these options, the minimum deposit stands at $1,000, and you can open an account for a term of three years.
The corresponding rates for each change each year on the anniversary of the purchase date to the rate in effect at that time and it would remain in effect for a year. These options also allow you to make additional deposits into your CD during the first and second anniversary of your purchase date.
But if your risk tolerance is not very high, you can compare CD rates across banking and credit unions that feature both fixed-rate and other variable options.
| Certificate Type | Minimum Deposit | Term | APY |
| SaveFirst Account | $5 | 3 Months to 5 Years | 0.40% |
| Special EasyStart Certificate | $50 | 12 Months | 5.30% |
| EasyStart (Share/IRA/ESA) Certificate | $50 | 12 Months | 4.75% |
| EasyStart (Share/IRA/ESA) Certificate | $50 | 18 Months | 4.45% |
| EasyStart (Share/IRA/ESA) Certificate | $50 | 24 Months | 4.15% |
3-Month Share Certificate Interest Rate Comparison
Overview of Navy Federal Credit Union CDs
The NFCU offers a range of CD options designed for different objectives from saving for short-term goals to building your retirement nest egg or investing in your child’s college education. It also stands as a powerhouse when it comes to interest rates, featuring options that can compete with some of the strongest offerings at online banks, which are known for savings accounts and other products with above-average rates.
Generally speaking, your interest will be highest when you open accounts with longer terms. But keep in mind that you're supposed to keep your money in the CD for its term length to make the most out of it. Tap into it early, and you’ll get slapped with a penalty.
Penalties are handed out as follows:
- Certificates with a term of one year or less: You’d lose all dividends on the amount you withdraw for 90 days or from the date of purchase or renewal (whichever is less).
- Certificates with a term longer than one year: You’d lose all dividends on the amount withdrawn for 180 days or for the length since the date of purchase or renewal (whichever is less).
- A certificate with a term of five years or longer: You’d lose all dividends earned on the amount withdrawn for 365 days or since the date of purchase or renewal (whichever is less).
How Much You Earn With Navy Federal Credit Union Over Time
Time is on your side when you invest in a certificate with NFCU. Longer terms and higher deposits tend to carry higher interest rates on all their CD options. But some specific options stand out. For instance, a 5-Year CD earns up to a 3.85% APY depending on balance. This rate is significantly high, especially considering that the NFCU operates physical branches.
The table below outlines what your earnings could look like based on certificate term length and initial deposit.
| Initial Deposit | 3-Month Certificate | 12-Month Certificate | 24-Month Certificate | 5-Year Certificate |
| $1,000 | $1,006.81 | $1,048 | $1,085.76 | $1,205 |
| $10,000 | $10,068.05 | $10,480 | $10,857.64 | $12,049.99 |
| $20,000 | $20,136.10 | $20,960 | $21,715.28 | $24,099.98 |
| $100,000 | $100,692.77 | $104,850 | $108,680.63 | $120,790.42 |
How Navy Federal Credit Union Rates Compare to Other Banks
As a credit union, the NFCU functions a bit differently than a bank. But when it comes to CD rates, it can definitely compete. For example, NSFU’s 24-Month Share Certificate offers an APY of up to 4.25%, while the rate of its Suncoast Credit Union counterpart stands at just 2.55%. With that said, the NFCU’s certificate accounts can dominate CDs at some major banks. For example, Bank of America’s Featured 10-Month CD offers an interest rate of just 0.05%. Meanwhile, NFCU’s 5-Year Share Certificate fires back with an APY of up to 3.85% depending on the balance. In the table below, NFCU's minimum APY is displayed.
The table below shows how NFCU stands up with Capital One, a behemoth in the banking world; and Ally Bank, a leader in the digital finance space. It applies to deposits of at least $1,000. However, NFCU boosts its rates for balances of more than $100,000.
| CD Account | NFCU | Ally Bank | Capital One |
| 1 Year | 4.80% | 4.50% | 4.25% APY (as of 9/10/24) |
| 3 Year | 4.00% | 3.75% | 3.70% APY (as of 9/10/24) |
| 5 Year | 3.80% | 3.75% | 3.60% APY (as of 9/10/24) |
Should You Get a Navy Federal Credit Union CD Account?
You should open a CD account with the NFCU if you have simple, short-term savings goals and are comfortable with not touching your money for at least a year, which is when this credit union’s rates start getting competitive. In addition, this would be a good place for a member to test CD investing with its EasyStart or SaversFirst options.
Another perk to investing in NFCU certificates is that dividends are compounded daily and credited monthly, at which point you can begin taking dividends out penalty free.
However, dividends like all earned interest are taxable. If you accrue more than $10 in CD dividends for the year, the financial institution will send you a 1099 form to report on your tax return. NFCU’s certificate interest rates are high across the board, especially for longer-term options. But a large investment with robust earnings may mean you owe some money to Uncle Sam come tax season.
You may want to seek a financial advisor or tax professional to discuss the possible tax implications of investing in dividend-paying CDs. If you’re not sure where to start, you can use our SmartAdvisor tool, which connects you to financial advisors that serve your area. You can then review their qualifications and set up interviews to narrow down your options.
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