We've Got Your Savings Covered
We’ve been talking a lot about financial things that happen after the new year, but a couple we haven’t talked about yet are taxes and often people get work bonuses after the first. And this brings us to the subject of saving. We talk about saving a lot here, but that’s because it’s important. And it can change your financial journey.
So today’s subject is the many different accounts you can use to save at First Pioneers FCU.
One quick note before we start. How many of you have heard of the FDIC? This is The Federal Deposit Insurance Corporation. They supply deposit insurance to depositors in American depository institutions so, they insure your deposits at your bank. At Credit unions, loss is covered by the NCUA, which is the National Credit Union Administration, and is also a department of the US government. Your deposits are insured up to $250,000.
There are 6 types of savings accounts you can utilize at First Pioneers.
1. Basic Savings Account - This is actually the type of account required for membership at the credit union. You simply deposit $5 in your regular savings account for your membership to begin. That money will always need to be in the account to remain in good standing.
From there you can have multiple savings accounts if you wish. Did you know that? We have actually had people indicate they were unaware of this. Multiple accounts can be great for helping you save for special things or goals like a down payment for a car, a wedding, or even a baby being born.
It takes a couple of extra steps to get to your money which can be helpful to reaching your goal. If it’s extra steps, maybe you will choose to leave the money and let it grow.
a. At First Pioneers, there is an ATM card available for the savings account, that is if you don’t have a debit/ATM card with us already for your checking account. If you just have a savings account you wish to access, this ATM card allows you to do that. You can also use online banking or our mobile app to make transfers or access your money.
So the idea that you keep your money separate is good for your goals but also means you have multiple ways to access your money when you are ready for it.
b. Regular savings accounts gain interest, but a lower amount than other accounts will be talk about in a minute. Any interest is good though! It helps your money grow and your money is safer in the credit union than at your home.
2. Money Market Savings – First Pioneer money market is called a L’Argent account, meaning money or silver and French as a fun tie to the French heritage in the Lafayette area.
This is considered a good “in between” account since it is a between what’s called a higher yield account and a regular savings. A money market would be a higher yield, or in other words a bit higher interest rate.
a. For First Pioneers, this account requires a minimum $500 balance. You can make up to 2 withdrawals a month without a fee.
For people who frequently have higher savings balances and would not need to access the money as often, this type of account is a great option.
3. Christmas Club - These types of accounts have been around for years and are great for saving for your holiday shopping. You can put money aside into the Christmas club account all year long then on the first business day of November we move the money from your Christmas club into your regular savings so you can access it and begin your holiday shopping.
A. Withdrawing early comes with a fee. But hopefully this will help you stick to your holiday goals!
Some other financial institutions offer things like vacation clubs that have some kind of similar terms. So, if you need to save for a vacation, it may be worth inquiring on if you bank elsewhere.
4. Lucky Lagniappe – This account is actually for unique for several reasons.
a. It is only offered at participating credit unions in Louisiana.
b. You have the chance to win money by depositing. For every $20 you deposit each month your name is put in a drawing, up to 5 entries.
i. There is a drawing each month for 10 - $100 winners.
ii. There is a quarterly drawing for 2 - $1000 prizes given.
iii. Lastly, there is a yearly prize of $5000.
There are lots of chances to win!
c. Withdrawals can be made every 12 months without a fee.
Many people transfer the money from this account to a regular savings once a year and then start over again.
This is a really a fun account that gives you a unique way to save and maybe win! It’s a great option for funds that won’t have to be accessed frequently.
5. Certificates of Deposits (CDs) – CDs will generally have much higher interest rates than other savings accounts but they also require you to choose a term or length for your money to be in the account.
a. Terms often start at 6 months and can be as long as 5 years depending on the financial institution.
i. When your term ends you can either move the money into another account to make it accessible, let the CD “roll” and continue at the same term, or you can roll it into a different term length.
b. Deposit amounts to open a CD can be as low as $1000 so more accessible than many realize.
CDs can be a great way to save for long term things like retirement or a childs education. It may also be a good option if you are saving for something like a house and want to grow your funds before you need them. Choose a term that ends before you will need it and let your money grow while you wait.
We have other posts (and podcasts) where we speak in more depth on CDs if you are interested.
Be aware that not all financial institutions offer the same rates or even term lengths so be sure and check what is available at the credit union or bank you choose to use. Maybe even shop around for a good rate.
6. Individual Retirement Accounts (IRAs) - These are tax advantaged accounts where you don’t have to pay tax on the money as it grows. You either pay tax before you contribute to the account or after you withdraw from it depending on the type of IRA you choose.
There are traditional, roth and education IRAs.
a. A traditional IRA is a way to save for retirement that gives you tax advantages. Generally, amounts in your traditional IRA (including earnings and gains) are not taxed until you take a distribution (withdrawal) from your IRA.
If your employer doesn’t offer a 401K, this is a great to save for retirement yourself.
b. A Roth IRA is an individual retirement account where you contribute after-tax dollars. Your contributions and earnings can grow tax-free, and you can withdraw them tax-free and penalty free after age 59½ and once the account has been open for five years.
c. An education IRA is a tax-advantaged account for qualified education expenses. Education IRAs let parents and guardians finance a child’s elementary, secondary, and higher education costs.
As you can see, there are many options to choose from! Its generally just as simple as finding an account that works for you then setting a plan for your deposits or contributions to the account. So choose and account and get saving!
As always, if you have questions about what account is right for you or you need a hand setting up a new account, contact us at either branch and we will be happy to get you moving!