So you’re looking to start saving some money and decide to open up your first savings account. Now the question is, what savings account is right for you? There are lots of different options available, and it can be confusing to know which account best fits your specific needs. As a savings beginner, it is important to know what the benefits of a savings account are and what it can do for you.
A savings account provides you with a place to separate your emergency or vacation funds from your money meant for everyday spending. By putting this money into a savings account, you are able to add that extra barrier preventing you from spending it on something you don’t need, while also increasing your savings by earning dividends. The higher the Annual Percentage Yield (APY) on a savings account is, the more you will earn on the money stowed away in your savings account. Because credit unions are member-owned cooperatives, profits are returned to members through higher dividend rates.
Setting money aside is important in case you come across a financial emergency. To cover for most minor financial problems, you should set a minimum balance goal for your savings account and then build from there. The more money you set aside, the more coverage you will have in the case of a financial emergency. You can set this emergency fund aside in a simple, personal savings account, such as Service Credit Union’s Share Savings Account. If you find yourself looking to earn even more money on your savings, and you have the funds to put a little more away, a Money Market is a great way to do just that. Money markets require a higher minimum balance in the account to accrue dividends, but as a trade-off, they offer higher dividend rates than a standard savings account and often have tiers where you can earn even more on your money with the more you have in your account.
Saving for emergencies is a responsible and important way to keep yourself in good financial standing. However, there are other reasons to save as well. A savings account is a great way to set aside money for the holidays, vacations, and other times of the year when your expenses are going to increase. Setting aside money in advance to plan for these holiday or vacation expenses is a great way to keep yourself prepared and not have to worry about your personal expenditures when the time comes. If you’re looking for a higher-dividend option to save for these types of expenses, you may want to consider our Holiday Club, which allows members to set aside up to $3,000 with regular deposits throughout the year and earn higher dividends on their money.
If you are looking to save money but don’t think a savings account is a right move for you, there are other alternatives. If you have the money and don’t mind locking it up for a longer period of time, share certificates provide an excellent opportunity to earn more on your money. They offer higher dividend rates with a typical minimum deposit of $1000, and normally have the option of choosing from 6-month to 5-year terms. The longer you put your money in, the higher the return will be. If you are looking to save extra money and aren’t concerned about being able to access the funds quickly, certificates are a great way to do just that.
There are lots of different savings options to meet the different needs of people, but if you are looking to save, the most important thing is to start sooner rather than later. Find the account that best suits your needs, and start setting money aside as soon as possible. You never know when you might find yourself in need of extra cash, but having a savings account allows you to rest easy knowing that if that day comes, you’ll be ready.