What’s your Best Savings Option?

Pig with glasses 615283_xlWe all know how important it is to save, but sometimes it can be confusing when we see so many types of savings options. So what type of account is best for you and your situation?

This mostly depends on the amount of money of you are saving, how much money is coming in (cash flow), and how you want to use your savings.

Savings Accounts

The regular or basic savings account is what every member opens when they start their membership. This account is federally insured and requires only $5 to stay in the account. We put that $5 to the side, and then you start with a $0 balance. Members 1st does not require a minimum balance, other than your $5 opening deposit. Some financial institutions require a balance, or you will be charged a fee.

Once your balance hits $50, you will then begin to earn interest. You may withdraw funds without penalty, although federal regulation (known as Reg D) only allows 6 “electronic” withdrawals from a savings account. These do NOT include teller withdrawals. If you use Members 1st Online, you will see a Reg D alert at the top of the screen when viewing your savings account. This will tell you the number of electronic transfers you have remaining.

Members 1st also offers a Supplemental Savings account, which works similar to a Regular Savings. It’s simply an additional savings account. You may name this anything you would like.

The downside is that annual percentage yields (APYs) on regular savings accounts tend to be lower than the rates of return on other types of savings and investment accounts.

Both a Regular Savings Accounts and a Supplemental Savings Account may be used as an overdraft protection source. Overdraft protection is a service that allows funds to automatically be transferred from other Members 1st products to cover any overdrafts in your checking account. Unlike some financial institutions, Members 1st offers overdraft protection free of charge.

Money Management Accounts

This is another option which is sometimes called a money market account. (This is not a money market fund, which is a mutual fund. Those accounts are handled by our Investment Services division.)

This account works the same way as a regular savings and can be accessed at any time. However, the account has a “tiered” rate structure. It offers higher dividends based on your account balance.

A Money Management account is specifically designed to help you achieve long-term savings goals, but the funds aren’t “locked-in”.

Once again, we do not have a fee on this account if you fall beneath the required minimum for each tier.  Many institutions have a fee and only allow a certain number of withdrawals per once.

Holiday Club and Vacation Club Accounts

These accounts allow you to save for the holidays or vacation or anything other need. No minimum deposit is required and you are able to open either of these accounts any time during the year. You may make deposits in any amount at any time.

The funds transfer automatically to your regular savings account on October 1 for a Holiday Club and on April 1 for the Vacation Club.

There is a fee for early withdrawal, which is a standard at most financial institutions.

Share Certificates

If you are in the position to put money into an account and leave it for a longer period of time, you could consider investing in share certificates. These are also called savings certificates and certificates of deposit at other financial institutions.

The key benefit to certificates is that you can earn a higher return, depending on the term or length of the certificate.

You agree not to touch the money for a fixed period of  time, which can run from a few months to five years or more. However, if you decide to withdraw before the end of the term, you could face early withdrawal penalties.

The Bottom Line

Remember that the type of savings plan that you choose may not be the same as your friends or family. The choice comes down to how much money you want to put into savings, what kind of access you need to the money, and how long you can let it sit and earn interest. Take the time to compare rates, minimum balances and fees.

We are here to help you make your decision! Visit members1st.org, call TeleBranch (Customer Service) at (800) 237-7288, or stop into any branch.

Watch for our new Goal Savings account coming soon!

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