Savings Account Rates: How Credit Unions Help You Save

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Many people choose to go to a traditional bank to meet their savings goals. Doing business with a big bank can offer some conveniences, but oftentimes their corporate offices are states away from where you live.

In contrast, local credit unions offer a more personalized, community-oriented, less expensive alternative for those who want to save money. The Federal Deposit Insurance Corporation (FDIC) estimates the average savings account interest rate as of April 2020 as a sadly low 0.07%, which means you want to take advantage of the flexibility of a credit union to save money and earn interest in creative ways.

Additionally, credit unions have increasingly upgraded their technology offering the same or better online products and services as large national banks. Below we provide the many ways credit unions help members with their savings needs, an overview of different types of savings accounts, and tips on opening up a credit union savings account.

 

Credit Union Membership

The biggest difference between a traditional bank and credit union is the notion of membership. Credit unions use a membership business model that passes savings through to members, including those who join a credit union to save money.

Traditional banks are for-profit business entities that must answer to investors and shareholders. In contrast, credit unions require a membership that is based on common criteria, such as region, industry, union, or place of employment, and members own a small piece of the credit union.

Members also can get involved with governing the credit union. In turn, they serve their members by providing financial products with the lowest rates, fees, and terms they can afford. As you continue to read about the ways that credit unions help you meet your savings goals, know that these great terms are a product of the credit union business model.

Higher Yield

Credit unions typically offer higher rates on their savings accounts, resulting in better returns each year for members who have accounts. Most credit unions have checking accounts that earn interest and high-yield savings accounts, too.  High-yield savings accounts are federally insured, so they earn rates much higher than the national average. These types of accounts offer a significantly higher annual percentage yield (APY) allowing members to earn even more money to meet their savings goals.

More Convenience

Financial planning includes finding the right accounts for your individual situation and optimizing those accounts to help you earn the most interest as you save money. Saving money with a credit union gives you online tools, but most importantly, you also have the local access you need.

Most credit unions are active parts of their community and seek to build personal long-term relationships with their members. When you need guidance in planning and making the right choices for your financial future, your local credit union is close by to answer any questions you need. 

 

Lower Account Requirements

When you open a savings account at a traditional bank, you often need a minimum balance for your deposit. Sometimes banks wave fees for transfers and withdrawals if you maintain a specific balance, but not always.

Whether you open regular savings, high-yield savings, a money market checking account, or any other account that earns you interest and helps you save money, you typically have a much lower account requirement.

Additionally, you can withdraw and transfer funds without restrictions as long as you are in compliance with federal laws. Federal law does limit transactions to six per month, but some banks set limits as low as two or three withdrawals per year.

Keep in mind that depositing money into your account and ATM withdrawals do not count against the federal limit. If you make an additional withdrawal, the institution will close your account. Credit unions typically place the lowest account requirements required by law to make life easier for their members.

 

Low Fees or No Fees

One of the ways that credit unions help their members save money when they open and maintain a savings account is by providing products with low fees or no fees. Monthly maintenance fees, as well as transaction fees, add up and prevent members from reaching their savings goals as easy.

Even when members need to make ATM withdrawals or transfers, credit unions typically do not charge fees and even sometimes refund fees from out-of-network ATMs.  In some cases, you might be required to enroll in electronic statements instead of paper statements, but this is typically the go-to option for most anyway.

Types of Savings Accounts

You can choose from a variety of savings accounts to help you achieve your financial needs and goals. They include:

Money Market Savings

Many credit unions have some type of high-yield savings account, sometimes referred to as money market savings accounts. A money market savings account gives members a higher earning potential, but unlike investment accounts, they allow access to the funds.

Some credit unions have premium versions, allow those with high balances to earn more money. High-yield accounts typically require you to keep a minimum balance of $2,000 or more and reward you with a higher APY when you save more money.

The APY typically tops at $250,000 which is the amount insured by the National Credit Union Administration (NCUA), which is the equivalent of the Federal Deposit Insurance Corporation (FDIC) that protects money in banks.

 

Share Certificates

A share certificate is a credit union’s equivalent to a certificate of deposit (CD). Share certificates have no risk and provide guaranteed earnings, which increase based on the amount you deposit and the length of your term.

Some credit unions provide low minimum deposits to help people save, but this option is not the best if you need access to funds. You can typically purchase share certificates with terms that range from one to five years.

When your money is in a certificate, you have to pay a penalty to withdraw it before the term ends. Yet, share certificates are great gifts, especially for kids, and they allow members to diversify their savings to achieve their ultimate goals.

Retirement Accounts

Credit unions give you the tools to begin saving retirement early. Depending on your financial situation and your retirement goals, you can invest your money in a variety of individual retirement accounts (IRAs) or a Coverdell education savings account (ESA).

Each type of account offers different tax advantages. Traditional IRA contributions are not taxed until you withdraw them and Roth IRA contributions are taxed immediately, so you don’t have to worry about paying taxes later.

Like share certificates, you get penalized if you dig into your funds before the end of their term. Your local credit union can answer questions and help you decide the best way for you to save for retirement.

Holiday Savings Accounts

A holiday savings account is an example of one of several special types of savings account you find at credit unions. For some people, buying gifts during the holidays means racking up credit card debt. Holiday savings accounts allow you to put a little away for holidays out of each paycheck, so you can pay cash for your gifts and other holiday needs.

Savings Builder Accounts

Many credit unions offer some type of savings builder account that gives you the opportunity to save for specific goals. Maybe you are saving an emergency fund, a vacation, a boat, taxes, or an upcoming event.

These types of accounts can vary among credit unions, but many times you can choose whether you have access to your funds and how often you intend on making withdrawals. The longer you “lock yourself out” from your money, the lower you pay in fees.

Health Savings Accounts

Most health insurance plans have co-pays and deductibles. Although insurance protects you from major expenses, these lesser expenses can throw a wrench in your monthly household budget when injury or illness occurs.

Health savings accounts (HSAs) allow you to save pre-tax dollars to cover medical costs and the interest rates are usually much higher than a standard savings account. Additionally, your earnings are tax-free.

HSAs, however, do have eligibility requirements and you can only contribute a certain amount each year. Your member representative at your local credit union can answer any questions you have.

Using Your Checking Account to Save Money at a Credit Union

Opening a saving account at a credit union is the right choice because of all the benefits covered above, but many of those same benefits apply to checking accounts too.

When you keep your checking and savings accounts with the same institution, it makes it far easier and more convenient to manage your accounts online and in person. This is especially important in the case of an emergency or unforeseen cost that requires you to quickly transfer funds.

High-yield savings accounts and premium checking or money market checking accounts have some same advantages, especially in terms of interest rates. Many premium checking accounts have tiered interest rates, which offer the highest APY at mid-level balances.

You can play your checking and savings accounts off of one another to the extent that you can move your money around to ensure you are making the best return on your savings.

Tips for Opening up a Credit Union Savings Account

You understand the benefits of saving at a credit union, and now you are also familiar with many of the common types of savings accounts available to you. Here are a few tips to help guide you when opening a savings account at a credit union:

  •       Have a game plan. Your local credit union member representative can guide you towards the best solutions for your savings needs when you have an idea of your goals. When you open up your account, you should be able to provide information about what specifically you are saving for, how much you can dedicate to meeting your goal, and whether you will need access to your savings.
  •       Compare all options. Make sure to ask questions about the interest rates, potential fees, minimum opening requirements, and minimum balances for any savings accounts you are considering. You will find rates high and fees low, but you want to make the right choice from the start.
  •       Beware of tiered accounts. Savings accounts that pay different interest rates at different balance levels can be beneficial for some, but they might not be the right for your financial situation. Depending on how the interest rate changes with your balance, you might have to frequently move money around to take advantage of the highest interest rates. This requires time that isn’t worth the effort for some. High-yield savings accounts will often grow faster and don’t require extra effort.
  •       Don’t forget about kids’ accounts. Many parents help their children and teens open a savings account, some younger than others. Credit unions typically have special accounts for those under 12 who want to start saving and share certificates are also an option. Whether saving for a car, for college, or for a fun summer trip, it’s easier to help the children in your life save their money when they bank with the same credit union where you have your savings accounts.

Contact Us Today to Learn More About Our Savings Account Options

Many choose to automatically go to a large national bank or online bank when they want to open a savings account, but going local is better. Not only are credit unions more convenient, but you often earn more interest on your accounts, and save money on fees. Dane County Credit Union has been serving the Greater Madison area for more than 85 years. Whether looking to save for retirement, save for college, build an emergency fund, or plan a trip, we have an account to help you meet all of your savings goals. Our Member Services team would love to meet with you, help you join the credit union, discuss your financial situation, and find the best way to help you meet your savings goals. Contact Dane County Credit Union today online or at 800 593-3228.

 

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Do I Need a Financial Advisor? How to Tell What Money Help You Need

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Just about everyone could benefit from speaking with a professional financial planner; however, sometimes the cost can be prohibitive. While seeking out the help of a professional financial advisor might be expensive, solid financial advice can sometimes save you significant amounts of money in the long run.

If you are struggling with managing your money or you feel uncertain about your long-term financial situation, chances are you could benefit from working with a financial advisor. That said, we understand it can be a confusing situation.

To help you understand if you could use the guidance a financial advisor can provide, we’ll explain what exactly a financial advisor is, what they do, and when you need one.

What Is A Financial Advisor

Essentially, financial advisors help you create a plan for meeting your financial goals. They work with you to determine a specific financial plan to help you achieve your goals. Whether you need help saving money, making wise investments, or reducing debt, a financial advisor can help you reach your financial goals.

The term financial advisor actually describes a wide variety of professionals and services. Investment managers, financial consultants, and financial planners all fall under the umbrella of financial advisors. Some financial advisors even work completely remotely; they can handle your digital investments from afar.

What Do Financial Advisors Do?

The particular services a financial advisor provides vary based upon the type of advisor they are. Across the board, most financial advisors assess your current financial situation. This means weighing your assets, debts, expenses, and income. From there, they identify areas for improvement and create a plan that allows you to achieve your financial goals.

Most effective financial advisors want to know your specific goals. They know that creating a plan that helps you reach your personal goals makes you more likely to commit to the plan.

Financial advisors can help in a number of ways. They help by calculating how much you should aim to save for retirement, making sure you have sufficient emergency savings, helping you plan your taxes, and explaining how you could tackle unwanted debts.

Financial advisors also help you build an investment portfolio. Whether you just want advice on how to begin investing or specific investment recommendations, you can rely on a good financial planner to help you with investment management.

Most financial advisors allow you to choose the specific services that are relevant to your situation. For example, a more traditional financial advisor that you would see in person would most likely offer personalized guidance for a continuing fee. While more remote-based financial advisors operate online. They offer financial advice that is less comprehensive but also less expensive.

Online and over-the-phone financial advisors offer cheaper financial advice but that advice tends to focus on a particular area of your financial portfolio. Then there are the more traditional financial advisors, which cost more but offer a more holistic approach and look at your entire financial situation.

When Do You Know If You Need A Financial Advisor?

When Do You Know If You Need A Financial Advisor

Source: canva.com

As mentioned, in an ideal situation, everyone would have the opportunity to consult with a financial advisor on a regular basis. In a perfect world, a financial advisor would be there to help everyone keep their finances in order and provide them with guidance whenever they made a large purchase or investment decision.

Unfortunately, professional financial advice is not always cheap. At the end of the day, financial advisors need to charge enough of a fee that they can make a living off of their services.

As with most areas of financial planning, the decision to hire a financial advisor depends on a careful cost/benefit analysis. Do the benefits a financial advisor offers justify the cost?

To help answer that, we will now go over some of the main reasons why someone should hire a professional financial advisor.

You Need Assistance Planning Your Financial Future

Many people do not like thinking about their long-term financial situation. If you feel like you are unprepared, thinking about your financial future can be an uncomfortable topic of conversation.

This is where a financial advisor can come in handy. If you have existing emergency savings and feel you can afford a financial advisor’s fee without going into debt, coming up with a long-term financial strategy with a financial advisor is probably a good investment.

You Want An Impartial Opinion About Your Financial Situation

It can be a little discomforting if you never have the opportunity to speak with someone else about your financial situation. Many people like to keep their income and debts private; fortunately, a financial advisor can provide a confidential and informed opinion.

Having someone you can trust look over your investment portfolio, savings, and debts can be well worth the fee. Again, if you can employ a financial advisor without risking going into debt, it is most likely a good decision.

You Do Not Like Dealing With Money

Some people cannot stand dealing with money. If you are one of those people, do not worry because a financial advisor can take care of those issues for you.

Remember, if you plan to hire a financial advisor on a long-term basis, it can be quite expensive but if you have sizable assets and do not like dealing with investments, a financial planner can generate plenty of money for you.

Even if you do not have investable assets, seeing a financial planner on a one-time basis can be a smart move if you are the type that hates financial planning. A reputable financial advisor can help make sense of your finances and put you on a more stable path.

Summary

Hiring a financial advisor can be costly, however, it can also be a worthwhile investment. If you feel confused about your financial future, want a second opinion, or just hate dealing with money, consider visiting a qualified financial advisor.

Source of Featured Image: canva.com

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What to Do With Extra Money: 6 Methods for Smart Saving and Investing

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Extra money comes in many forms. Perhaps you earned a raise or bonus at work, reduced your expenses, received a financial gift, or inherited an unexpected sum. Or maybe you decided to earn extra money driving an Uber or Lyft or picking up jobs on websites like Taskrabbit. Regardless of how you found yourself in a position where you have some extra cash, it is important that you know how to use those funds in a productive way. Continue reading What to Do With Extra Money: 6 Methods for Smart Saving and Investing

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News Release – Public Service Announcement – Community Donations

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DCCU donates to area non-profitsDane County Credit Union Donates $20,000 to Local Non-profits

Several local non-profits are the benefactors of $20,000 in donations made by Dane County Credit Union. These donations help support organizations that are providing needed services for those affected by the Covid-19 pandemic in our community. Continue reading News Release – Public Service Announcement – Community Donations

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Credit Unions & Low-Interest Personal Loans: How the 2 Go Hand-in-Hand

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A personal loan is a short-term loan from a lender that you pay back in monthly installments. The length of a personal loan varies as well as the interest rates for borrowing money. Unless your credit is strong enough to qualify for a 0% introductory credit card offer, a personal loan will often be your cheapest option for borrowing money. In fact, the Federal Reserve reports that the average personal loan interest rate is significantly lower than the average credit card interest rate, which was about 16.6% as of February 2020. Continue reading Credit Unions & Low-Interest Personal Loans: How the 2 Go Hand-in-Hand

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Press Release: New DCCU Board of Directors Chairperson

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DCCU Board of Directors ChangesDane County Credit Union Announces the Appointment of New Chair to Board of Directors

Madison, WI — After serving on Dane County Credit Union’s Board of Directors for 20 years, 9 of the those being the Chair, Joe Guastella, has retired from the board. Jeff Heil, who has served on the board for the past 8 years, most recently as Vice Chair, was appointed by the board to succeed Mr. Guastella as the new Chair.

“It has been a great honor serving on the board and representing the members of Dane County Credit Union,” said Guastella. “I am incredibly proud of what we have accomplished at this credit union over the years. I am confident in Jeff’s leadership and vision to continue making a positive
difference for our members and our community.”

Commenting on his appointment, Mr. Heil said: “I’m honored to accept the Chair of the Board appointment and look forward to continuing our credit union’s vision to provide our members with financial solutions to improve their lives.”

In addition to the newly appointed Chair, other appointed officer positions include: Theola Carter as Vice Chair, Cody Davies as Secretary, and J. McLellan as Treasurer.

About Dane County Credit Union
Dane County Credit Union, a $200 million, full-service, not-for-profit financial cooperative, serves everyone who lives or works in Dane County and the surrounding counties. Dane County Credit Union currently has 4 branches in the Madison area with 20,000 members. To learn more, visit www.dccu.us.

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How Much of My Income Should I Save? What the Experts Say

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Everyone’s savings goals change as they progress through life. No matter how old you are or what your savings goals might be, one thing is always true – you are never too young or too old to save money.

Aiming for a specific savings target each month or each paycheck can be a great way to establish healthy financial habits.

Whether you are a recent graduate or well into your career, it is never too late to start saving part of your income. Saving for emergencies, retirement, education, and down payments are all valid reasons to want to establish a solid savings plan. Continue reading How Much of My Income Should I Save? What the Experts Say

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Why Bank Online with a Local Credit Union

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Many people who think about opening a checking or savings account or seeking out other banking services automatically assume they need to head to their nearest local bank. This, however, is not your only option, and not always the best option. Credit unions offer many of the same services that banks do and are notorious for their exceptional customer service. We want you to know that you have an alternative. Below we offer a broad overview of the many advantages and benefits of banking online with a local credit union. But first, let’s take a look at some major differences between banks and credit unions. Continue reading Why Bank Online with a Local Credit Union

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How to Manage Your Money: 19 Tips to Do it Right

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For many people, money management can be an overwhelming and uncomfortable topic of conversation. Maybe you feel like you have put off saving for retirement for too long or your emergency savings is not what it should be.

Whatever is causing your anxiety, the truth is there is no better time than the present to get a grip on personal finance. Once you get the ball rolling, you will soon wonder why you waited so long to form healthy financial habits.

To help you get started, we have assembled 19 tips to help you meet your financial goals. Continue reading How to Manage Your Money: 19 Tips to Do it Right

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Debit Card Do’s and Don’ts  – A Safety Checklist

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DCCU debit card MastercardDebit cards – the modern payment convenience item that makes purchasing any item or service so much easier than using cash or writing a check. Many of us have been using them for so long it’s not even a second thought. While some folks are new to this method and are still learning.

No matter which camp you’re in, there is good reason to review the do’s and don’ts regarding your debit card, as well as common practices to protect yourself from fraud. Continue reading Debit Card Do’s and Don’ts  – A Safety Checklist

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