Savings Accounts Archives - Common Trust FCU

Why You Should Have Two (or More) Savings Accounts

Having multiple savings accounts isn’t just for financially irresponsible kids and young adults, they’re actually the perfect solution to your financial goals. Having multiple accounts means that you can allocate your income to different places and potentially even get higher interest rates for doing so. You can also monitor each specific goal through its designated account—so long, late nights calculating percentages and writing up algorithms! Ultimately, having multiple accounts allows you to save for specific financial goals, providing you with the springboard to achieve financial success faster. 

3 Reasons To Have Multiple Accounts

  1. As mentioned briefly above, having multiple accounts is a launching point for you to achieve financial success. By having separate accounts, you can see real progress happening each week, and devise new ways to save even more. With the simplicity of mobile banking, saving more money is easier than ever and tracking your progress is a breeze.

  2. Each different savings account likely has a different rate of interest. This is where the research comes in: many accounts, like a CD, will give you higher interest rates for stowing your money away and not touching it for a few months. Having multiple accounts can yield a higher amount of accumulated interest, further growing your pre-existing savings bundle. It’s important to learn the terms of any account before opening it, however, be aware of any and all surprise fees or limits!

  3. Segmenting your goals into separate accounts gives you the ease of prioritizing which objectives need a little more TLC. You can monitor the progress of each account via online or mobile banking, and make the decision of how you want to distribute your savings. Let’s say you’re saving for both a car and holiday purchases. Naturally, since the holidays are fast-approaching, you may want to transfer a higher percentage of funds to your holiday account. Ultimately, having separate accounts allows you to quickly and easily set up a budgeting system and stick to it.

A Good Strategy: Set up Automated Payments

From credit cards to debit cards, and all the bills in-between, automated payments should become your best friend in the financial world. The perk of using this nifty tool is that you never have to think about making your payments or transfers each month. This financial responsibility can also help further improve your credit score and report, saving you even more money in the long run. 

What to Watch Out For

  • Fees. The last thing you want when you’re trying to save money is for a huge chunk of change to be removed as soon as your money goes into the account. And you certainly don’t want to be blindsided when you haven’t done your proper research. Check in with your credit union to see if they bill you for things like transactions and overdrafting, and what accounts will help keep fees to a minimum. There’s no one-size-fits-all to savings accounts. Remember: this account should help you save up for future goals, not give you unnecessary anxiety.
  • Transfer Limits. There’s nothing worse than needing to transfer money out of your savings account for an unplanned event, but finding out you’ve hit your limit on transfers for the month. You then have to make a choice: forgo the cash or pay an unfortunate fee. Beware of Transfer Limits that only let you transfer money out of your savings account a certain number of times. Typically the limit is six transfers per month on certain withdrawals and transfers according to Regulation D from the Federal Reserve. If you feel like you the limits won’t be a problem for you (especially if you’re fulfilling a strict financial goal), then dive right in. But if you have a doubt in your mind, an account with stern transfer limits may not be the right fit. Regardless, be sure to discuss potential transfer limits with a banking consultant before signing off. 

Saving up for a special purchase? Want to put money away for your long-term plans? Try opening a second account. At Common Trust, we have so many ways including our Holiday Clubs, certificates, and various tailored savings and credit accounts. Your purchase could be right around the corner – give us a ring or reach out via email today!

When to Use a Credit Card vs. Debit Card

Most people have at least one debit card and one credit card in their wallet. Although both cards can be used in many of the same places, it can be difficult to determine which card is best for each transaction. When you use your credit card, you may earn points, but your debit card won’t charge you interest. Which do you choose? Here are some tips to help you decide.

3 Major Differences Between Credit & Debit Cards

Where the Money Comes From
A debit card is backed by the money in your checking account. You can only spend what you already have. When you use your debit card it’s like using cash because you must have funds available in your account or the transaction will not go through. With a credit card, you have a pre-approved spending limit and you can use the card repeatedly until you reach that limit, regardless of how much money is in your bank account. Of course, you will have to pay that money back eventually. It’s like you’re making a promise or taking out a small loan every time you use a credit card.

Proof of Payment
Depending on the amount of the purchase, you may be required to provide a PIN or signature to complete the transaction. Typically, a PIN is used for a debit card. This can be set up by your bank or you may have access to change it anytime you want. It’s important to remember this number and never write it down. If someone else finds it, they can use your card and drain your bank account. With a credit card, you will not have a PIN but instead, you’ll be required to provide a signature. This signature states that you will pay the bill when it’s due.

Limits of the Card
Both types of cards have limits but in different ways. Since a debit card takes money out of your checking account, you can only spend as much as you already have. If you overspend, it may pull money from your savings account and you could be charged a fee. This is called an overdraft. Most banks will give you the choice to allow an overdraft to happen with a fee, or to cancel the transaction before it goes through and avoid the fee. Think about your own spending habits and decide what’s best for you. With a credit card, you will be charged interest for every month you carry a balance. This is where most people tend to get in trouble. They charge more than they can afford to pay off in a single month, carry a balance, and then owe more due to the interest.

When to Use Which Card

When deciding which card to use, consider your personal spending habits, the pros, and cons of each card, and the purchase in question.

A debit card is the ideal method of payment for daily purchases or small transactions. Groceries, gas, and movie tickets are all easily paid for with a debit card and are items you likely would have otherwise paid cash for. You don’t have to worry about paying it back or accruing interest, and this is also a good choice if you’re likely to get into credit card debt that you’ll have a hard time paying back.

Online purchases are more easily refunded or refuted if on a credit card. Car rental and hotel reservations may come with additional costs when you return the vehicle or check out. Many credit cards come with reward options such as cashback, earning points towards flights, and more. It may be more beneficial to purchase gas and groceries on your credit card if you earn extra points for them that you can save up for a rainy day.

Credit & Debit Cards from Common Trust

Think you’re ready for a new credit or debit card? At Common Trust, we offer both low-interest credit cards and hassle-free debit cards for our customers, as well as great tips for learning how to make the most of each card. If you’d like to learn more about these offerings, please don’t hesitate to contact us today by calling 781-933-2600 or visiting commontrust.org. We look forward to helping you achieve financial happiness.

9 Most Common Savings Accounts — Which Is Right for You?

The nostalgic clink of a full piggy bank has evolved for the digital age — and it’s time to take advantage of the various savings accounts available to modern workers and savers looking to make the most out of their hard-earned savings. But with the variety of savings accounts to choose from, it can be difficult to make a confident choice. 

What type do you need? Which is the safest? Which gives you the most access to funds? Which will pay the most in interest? These are all valid questions, especially when you’re looking to open an account today to reap the most in future savings. Let’s take a look at the 9 most common savings accounts and what they can do for your money. 

1. Savings deposit accounts are interest-bearing that allow you to withdraw money anytime for up to 6 transfers per month. This is what is considered to be a “normal” savings account.

This might be for you if: You want the simplest solution to storing money and earn interest.

2. Money Market Accounts (MMAs) are similar to normal savings accounts but allow you to withdraw money using checks and sometimes even debit cards. The deposit and balance requirements are higher than normal savings, as is the interest. 

This might be for you if: You want to save a lot of money but want access to it all.

3. High-interest savings accounts pay higher-than-average interest, or “yield” — but a high minimum balance, among other things, is required to earn that interest. 

This might be for you if: You want to save a lot of money but only need access to some of it.

4. Club savings accounts offer incentives for things like maintaining a minimum balance or reaching certain savings levels geared toward your goals.

This might be for you if: You like having a savings goal and don’t mind a slightly lower interest rate.

6. Student savings accounts are made for high school and college students and can feature lower minimum balances and more flexible terms. 

This might be for you if: You are a student who wants to save money.

7. Certificates of deposit (CDs) pay more interest than an average account but do not allow you to withdraw funds for a specified amount of time (anywhere from a month to 5 years) without penalties. 

This might be for you if: You want to put a specific amount of money aside to grow and do not need access to it.

8. College savings accounts (529 plans) are accounts used to save money for a child’s higher-education expenses. They aren’t tax deductible but won’t be taxed upon withdrawal as long as the money goes toward higher-education expenses.

This might be for you if: You want to start a savings plan for your child and don’t plan to do anything with the money other than pay for college. 

9. Individual Retirement Accounts (IRAs) are government-sponsored, tax-deferred accounts into which you can make deposits and manage investments to best grow your money between now and retirement.

This might be for you if: You want to plan for retirement by putting money aside now and allowing it to grow untouched until you reach the retirement age. 

Whether you have questions about an upcoming financial decision or just want to be more educated on the path of your money within the banking system, you need a crash course in financial education using sound information and advice. Common Trust Federal Credit Union understands your concerns and offers our Financial Education Center to help you best understand and prepare for new life milestones. Get started today!


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