Tempting 6.5% APY CD – Are You Eligible to Reap Its Benefits

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In an era of climbing interest rates, the Local Government Federal Credit Union (LGFCU) has made waves by offering a staggering 6.5% annual percentage yield (APY) on its new 6-month fixed-rate share certificate. This, as the Federal Reserve continues to hike rates, has resulted in a flurry of attractive offerings on Certificates of Deposits (CDs), some even exceeding 5% APY, creating a veritable gold rush for the discerning investor. However, as with all seemingly lucrative deals, this offer from LGFCU is not without its caveats.

The North Carolina-based LGFCU, which is insured by the National Credit Union Association for up to $250,000, has put forth this offer with a highly accessible minimum balance requirement of $250 and no listed account maximum limit. However, this offer is only accessible to a select group of individuals – employees or volunteers of North Carolina’s local government, including both elected and appointed officials, and their family members. This means that for the majority of potential investors, alternative high-paying CD options or high-yield savings accounts may be a more feasible choice.

Rising APYs and the LGFCU Fixed-Rate Share Certificate

The Federal Reserve’s continuous rate hikes this year have led to attractive annual percentage yields (APYs) on certificates of deposit (CDs), with some even exceeding 5%. One standout offer comes from the Local Government Federal Credit Union (LGFCU), which recently introduced a 6.5% APY for its 6-month fixed-rate share certificate. However, this seemingly appealing offer is limited to a small demographic, prompting most to consider other high-yielding CDs with less stringent conditions.

Scrutinizing the Details

Before choosing this share certificate for your savings, it’s essential to delve into the finer details, recommends Jill Gonzalez, an analyst at WalletHub. Your decision largely hinges on your investment preferences and financial objectives. The offer, launched this month by the Raleigh, North Carolina-based LGFCU, boasts a low minimum balance requirement of $250 and no apparent account maximum limit. The LGFCU is insured by the National Credit Union Association (NCUA) for up to $250,000.

Membership Eligibility

The membership criteria, like with many credit unions, may be the most significant barrier for many. Only a specific workforce residing in North Carolina can avail of this offer. Eligible individuals or their family members must be an employee or volunteer of North Carolina’s local government, including both elected and appointed officials. Other eligible individuals include contract workers, foster parents, or immediate family members of current LGFCU members, retired government employees, or spouses of deceased eligible members.

Potential Pitfalls

The LGFCU offer, like most CDs or share certificates, comes with an early withdrawal penalty. Withdrawing funds before the term ends results in a penalty of 90 days’ dividends or the actual dividends earned, whichever is less. This penalty makes it all the more crucial to commit to the term till its conclusion. Once the term ends, depositors are notified and given the option to roll over the dividend and/or principal into a new share certificate, let it automatically roll over to another 6-month term, or collect the principal and earned interest.

Factors Behind Rising CD Rates

The Federal Reserve’s decision to hike the benchmark funds rate to 5%-5.25% in June from nearly zero a year ago in its effort to tackle rising inflation has been a significant factor behind the increased CD rates. Consequently, CDs have become more profitable for savers. As per Federal Deposit Insurance Corporation (FDIC) data, the national deposit rate for CDs has gone up over the past year, with 6-month CDs reaching an average of 1.34% APY as of Aug. 21.

Alternative Saving Options

Although CDs or share certificates can offer a relatively safe and guaranteed rate of return if you qualify, there are several other ways to earn a high interest rate with fewer requirements or restrictions. High-yield savings accounts, for instance, provide more liquidity than CDs and might be a good option for those who want higher rates without the longer commitment of a CD.


The LGFCU offer is a shining example of how Federal Reserve rate hikes have led to increasing APYs, benefiting savers. However, the stringent eligibility criteria may limit its appeal to a broader audience. It highlights the importance of scrutinizing the fine print before investing, considering alternatives, and aligning investments with personal financial goals. With numerous high-yield options available, savers can find the right fit for their needs without compromising on returns.

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