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All You Need to Know about Savings Certificates

Watch your money grow! Share certificates are a great low risk investment option. See how much you could earn on your money. Learn more!

Are Savings Certificates Right for You?

If the lump under your mattress is getting uncomfortably big and you’re looking for a safer, more lucrative place to park your savings, look no further than Section 705. As an institution that’s completely devoted to your financial wellness, we offer several secure options for savings, including: Share Certificates, Traditional IRAs, Lucky Lagniappe Savings, Christmas Club, Vacation Club, Super Green, Youth Savings, and Regular Savings Accounts.

Another excellent option we offer our members to help their savings grow is our savings certificates. They are sometimes also known as share certificates, and referred to by banks as CDs. These unique accounts offer the best of both worlds when it comes to your savings. First, you’ll be giving your money a greater chance at growth than it would have in a typical savings account. Secondly, you are not subjecting your savings to the inherent risks and potential for loss that accompanies investing in the stock market.

Let’s take a closer look at the way this fantastic savings product works and why it might be the perfect choice for you.

What is a Certificate?

A savings certificate is a federally insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts and some money market accounts. Generally, there is no monthly fee to keep the certificate open.

However, unlike a savings account, your money will be tied up in a certificate. A typical certificate will not allow you to add any money to the certificate after you’ve made your initial deposit. You also won’t be able to withdraw your funds before the maturity date without paying a penalty.

Terms and conditions of Certificates

As a member of Section 705, you can open up a certificate today. However, there are some basic requirements that must be met before you can do so, including a minimum opening balance and a commitment to keep your money in the account for a set amount of time.

The minimum amount of funds you’ll need to deposit to open a certificate will vary widely from one financial institution to the next and also depends upon the term you choose. Some institutions will accept an initial deposit as low as $50 for a certificate. Others, such as a “jumbo” certificate, will demand an opening balance of $100,000. In general, the more money you invest in a certificate, the higher rate of interest it will earn. At Section 705, you can open a certificate with as little as $100 at an Annual Percentage Yield (APY) of .25%.

Certificate term lengths also vary greatly among financial institutions, with most offering a choice of certificates that run from three months to five years. Typically, certificates with longer maturity terms will earn a higher rate. Here at Section 705, we offer our members certificates that can be opened for just 3 months or as long as 4 years. Our dividend rates start at .25 for short-term certificates and go up to 2.75 for our long-term options. To hear more about our certificate terms and rates, speak to a Section 705 representative today. Click for the dividends and disclosures on our share certificates.

Is a savings certificate for everyone?

While keeping your savings in a certificate can be an excellent option for your money, it is not for everyone. Before you go this route, ask yourself these important questions:

  • Do I have an emergency fund set aside to help me get through unexpected events or circumstances?
  • Do I anticipate needing to access these funds during the life of the certificate?

Remember: Your money will be tied up in the certificate and you will not be able to access it without paying a penalty. A certificate works best for people who have money set aside for a rainy day and are fairly certain they will not need to access the funds in the certificate until its maturity date.

Why keep your money in a certificate?

Here are some of the most popular reasons people choose to open a certificate:

  1. Low risk. While nearly every investment carries some sort of risk, your money is always safe in a certificate. With each Section 705 certificate insured by the National Credit Union Administration up to $250,000, you can rest easy, knowing your money is completely secure.
  2. Higher dividend rates. Certificates offer all the security of savings accounts with higher yields. It’s more for your money, just for choosing to invest it in a certificate.
  3. Locked-in rates. There’s no stressing over fluctuating national interest rates with a certificate. The APY is set when you open the account and is locked in until its maturity date. Instead of playing guessing games, you can determine exactly how much interest your money will earn over the life of the certificate the day you open it.

If a certificate sounds like the perfect choice for you, stop by Section 705 today to learn more. We’re committed to giving your money its best chance at growth.

Sources:

https://www.nerdwallet.com/blog/banking/cd-certificate-of-deposit/
https://www.thebalance.com/cd-basics-how-cds-work-315245
https://www.businessinsider.com/5-things-no-one-knows-about-cds-2012-10

6 Ways To Save On Your Summer Vacation

beach

Photo Credit: Pixabay.com (http://ow.ly/ZTc030dvgXF)

Vacation Time!

The ocean is calling – and so is the open road. Your dream vacation awaits! But first, you need to work out the financial details. How are you going to pay for your getaway? How much can you realistically spend? Where is the money for your vacation going to come from?

Ideally, a plump vacation fund that’s fed throughout the year is the way to go. Unfortunately, though, we often don’t think about how to pay for vacation until it’s a few weeks away. To make things even worse, according to LearnVest, an alarming 74% of Americans go into debt to pay for a vacation.

Don’t become part of that statistic! Be proactive in planning your vacation by saving up for it in advance. Forgo some luxuries in the months or weeks leading up to your vacation and save the extra cash for your getaway. Consider running a yard sale featuring all of your forgotten treasures and use the profits to fund your trip. Skip your weekly dinner out for a while and put the money in your vacation budget.

Now it’s time to plan your vacation! When you’ve got the money saved up, create a realistic vacation budget. These six vacation saving tips will help you plan the perfect getaway while staying well within your budget.

1.) Timing is everything
 
Be a savvy shopper. There is an ideal window for buying everything, and booking airline flights is no exception. Flight prices generally fluctuate until departure day, but experts say the sweet spot is 54 days before your travel date. If you don’t want to be busy checking prices all day, sign up for emails from a savings alert site. Let them know which dates and locations you’re interested in, and they’ll let you know when a flight goes on sale so you can book your discounted tickets before they’re sold out.
 
2.) Clear your cache
 
Hotel and airline sites use cookies to determine what you’re shopping for. They’ll see which days you’re searching and raise their prices accordingly. Beat the system by clearing your cache before every new search so they can’t read into your browser history. You might see as much as a 50% drop in prices when searching with an empty cache!
 
3.) Sweet-talk your way to savings
 
Just because your hotel room is pre-booked, it doesn’t mean you can’t save. Don’t be shy about asking for an upgrade at check-in. About 78% of hotel guests who request an upgrade at the front desk actually receive one. Some face-to-face schmoozing can go a long way!
 
Also, by 6 p.m., most hotels know which rooms will be filled for the night. If you check in later in the day, you’ll have a better chance at getting the keys to the room with the incredible view – even with your economy-class price tag.
 
4.) Never pay full price
 
You can score a deluxe vacation without the deluxe price tag – all it takes is a little research. Check sites like coupondivas.com, entertainment.com and Groupon.com for amazing deals and deep discounts for local eateries and entertainment centers. You can also find cheaper tickets to nearby amusement parks by looking for sellers on Craigslist. Also, if you’re traveling with kids, don’t forget to look up restaurants with “Kids Eat Free” promotions.
 
5.) Freebie fun

Challenge yourself to enjoy one day of your vacation without spending any money at all. Search local sites and blogs for write-ups about fantastic free things to do nearby. You might find a charming family farm, a gorgeous waterway, a fun splash pad for the kids or a scenic hiking trail. Or, just spend the day at the closest beach!

Don’t eat out on this day either. Many hotels include a continental breakfast – take full advantage. For lunch, you can picnic on sandwiches. Dinner can be something effortless and delicious that you brought from home or pick up at a local supermarket. Consider packing a travel grill or panini maker for easy meals. You can heat up some hot dogs or burger patties, or bring some baguettes and an assortment of sliced cheeses for fresh paninis. Round off the meal with some pre-sliced veggies.

You’ll be surprised at how much fun you can have without spending a penny!

6.) Save your mega event for the last day

The taste of dessert is what lingers after the meal is through. End your vacation on a sweet note by saving your most exciting event for your last day away.

If you’re unsure of how you’re going to fund your getaway, call, click or stop by Section 705 FCU to ask about taking out a personal loan or opening a vacation club savings account. We want to help you make your dream vacation come true!

HOW MUCH 20-SOMETHINGS SHOULD SAVE

How much 20-somethings should save!

Your 20s may seem like an odd time to think of saving for retirement, but it’s actually the perfect moment to start planning for your later years. That’s because the earlier you start saving, the more time your money has to grow.

Savers who begin setting aside 10% of their earnings at 25, for example, could amass significantly more by retirement age than those who wait just five more years to start saving. You can use a retirement calculator to see how much you should start saving now to reach your retirement goal.

Building a nest egg on a starter salary and a shoestring budget can seem daunting, though. Focusing on the incremental savings, rather than the goal, can help your savings objectives feel more manageable.

HOW MUCH TO SAVE FOR RETIREMENT

For those earning around $25,000 a year, the median income for 20 to 24 year olds in 2015, saving the recommended sum of 10% amounts to a little more than $200 a month.

It may seem like a reach, but consider this: If you start saving $100 a month at age 25 and invest it to return 7.7% a year — the average total return of the Standard & Poor’s 500 Index of U.S. stocks over the past decade — you’ll have more than $378,000 available at retirement age. And it could be tax-free.

If you wait until you’re 30  to start and save the same monthly amount at the same rate of return, you’ll wind up with less than $253,000.

Several vehicles can help you build a retirement fund. A 401(k) plan, typically offered by your employer, is often the most convenient and easily accessible of these. Contributions you make usually aren’t taxed, which helps reduce your income tax liability.

Pre-tax 401(k) accounts make up around 80% of retirement plans offered by employers, according to the American Benefits Council. Roth 401(k) accounts are another option, though these are less widely available, and money contributed to a Roth 401(k) account goes in after it’s taxed. Money withdrawn from this type of account — including earnings — is usually tax-free.

Companies that offer a 401(k) plan often match employee contributions, up to a certain percentage. This is essentially free money toward your retirement.

If your employer will match your contributions, try to take full advantage and commit a large enough percentage to get the full benefit.

Beyond a 401(k), individual retirement accounts, commonly referred to as IRAs, offer another solid option. There are two types: traditional and Roth.

Money put into a traditional account is tax-deferred, similar to funds put in a traditional 401(k) plan. That means those funds aren’t taxed until they’re taken out. But typically any earnings you make with the money are also subject to income taxes on withdrawal.

Money put into a Roth IRA has already been taxed when you earn it, so there’s no immediate tax benefit. When it’s time to withdraw the cash, however, you usually don’t pay taxes on it. And anything the money earns also can be taken out tax-free.

Contributions to both types of IRAs are currently capped at $5,500 a year for those under age 50, and $6,500 for older workers.

HOW MUCH TO SAVE FOR EMERGENCIES

In addition to retirement, it’s also wise to save for a rainy day. Ideally, your emergency fund should be enough to cover three to six months of living expenses.

Some experts suggest setting aside even more for savings and investments: 20%. That’s roughly $415 a month on an annual income of $25,000.

That’s not always feasible, especially if a big chunk of your monthly income goes to student loan and credit card payments. Consider saving what you can, even if it’s just $10 a month.

Making a habit of saving now could serve you well down the road. And, as your income increases, the percentage you save can as well.

© Copyright 2017 NerdWallet, Inc. All Rights Reserved

Three Jars: Kids Saving Challenge

The Three Jars!

When it comes to smart money management, transparency is key. For adults, that means keeping accurate records. But how can young children get a real sense of how much of their money goes to spending and how much they’re saving? It can be done by providing them with a simple, visual system for dividing their money. Instead of an old-fashioned piggy bank, consider using three clear glass jars.

Three Jars: Kids Savings Challenge

For an accessible version of the above infographic, learn more here! (PDF – New Window/Tab)

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