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Understanding Savings Accounts at Credit Unions in Florida

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We all recognize the need to save money. An estimated 89% of Americans save money regularly—mostly for retirement, a home, or a vacation. However, when it comes to emergency funds for an unexpected car repair or vet bill, nearly half couldn’t cover a sudden $1,000 expense without using a credit card or borrowing the funds.

If you want to increase your savings, the first step is understanding your savings account options. That includes researching the best saving account rates in Florida and the different types of available savings accounts.

Saving With Your Local Credit Union

Savings accounts are a place to store money that you don't plan to spend right away. Savings accounts are an ideal place to hold an emergency source of funds or savings for specific shorter-term goals. You want ready access to the money or access after a specified period. You wouldn’t use a regular savings account to save for retirement since the returns are likely to be better if the money is invested in a higher-yield instrument.

Banks and credit unions offer savings accounts, but there is a big difference between them. Credit unions are not-for-profit organizations owned by their members. Their savings accounts are called “share savings accounts.” The “share” represents the accountholders’ ownership interest in the credit union. Members don’t technically receive interest; they receive profits back in higher annual percentage yields (APYs) and lower fees.

By contrast, banks are for-profit organizations that are often publicly traded. Banks typically have higher minimum account balance requirements to avoid fees.

Accounts at both credit unions and banks are protected up to $250,000.

If you are shopping around for the best saving account rates in Florida, it is important to consider fees, minimum balance requirements, and locations. Credit union accounts have debit cards like accounts at banks. However, credit unions may be more accessible, even if their branch locations are limited to a particular region.

For example, Power Financial Credit Union (PFCU) has branches in South Florida spread between Juno Beach and Homestead, but members can use ATMs fee-free at credit unions throughout the U.S. PFCU and many other credit unions use a  Co-Op Shared Branch Network, allowing members to access their accounts from other credit unions. This enables credit unions to offer more resources, better rates, and more conveniences than large bank chains.

Unlike banks, credit unions usually have some joining criteria. Membership in many is limited to employees at specific companies or in specific industries. Some credit unions also allow membership based on geography. For instance, PFCU members must live, work, or attend school in 13 counties in South Florida; employees at specific firms and their family members may also join.

Choosing the Right Savings Account

When researching savings accounts, consider the interest rates, ATM and other fees, ease of transferring money, limits on transfers, and minimum balance requirements. 

Here are some options:

Traditional Saving Accounts

These flexible accounts are great for building an emergency fund. Because they are readily accessible, they have lower dividend returns than some other types of savings accounts. A variation of this is a “club account,” a dedicated account that helps you save for a particular purpose, such as a wedding, new car, or vacation.

Savings Accounts for Kids or Young Adults

Some accounts are exclusive to children and help them develop good financial habits early. (These differ from custodial or college-savings accounts parents open in a child’s name.) For example, PFCU offers its Rocky Raccoon Youth Savings Account for members aged 12 and under. Deposits earn them tokens that can be saved for prizes. Each “A” on a report card boosts their balance, too.

Money Market Accounts

These savings accounts have a checking component. They offer higher interest but limited monthly withdrawals or checks and larger minimum balances.

Certificates of Deposit

These products allow savers to deposit money for a specified term with a guaranteed rate of return. Certificates of Deposit (CDs) have much higher APYs than many other savings vehicles. 

Health Savings Account

These tax-advantaged accounts let people with high-deductible medical plans save and pay for qualified healthcare costs.

Retirement Savings

There are a variety of IRAs that allow you to save either tax-free or tax-deferred for retirement, as opposed to 401(k) and 403(b) accounts offered by employers.

Strategies for Increasing Savings Account Balances

Increasing your savings starts by opening a savings account at a credit union with some of the best savings account rates in Florida. When it comes to savings accounts, interest rates (APYs) are typically higher at credit unions than at large, traditional banks.

Besides considering APYs, investigate the fees that may be charged for using a particular type of savings account. If you have access to a credit union, take time to research the types and terms of the savings accounts they offer.

Once you're confident you've found the best saving account rates in Florida, be sure to set realistic goals. It may seem daunting to say, “I want to save $15,000,” when you earn $50,000 per year. So, create a monthly or yearly budget, and set a savings goal you can live with, such as $125 per paycheck.

Then, set up an automatic withdrawal from your main bank account. If your employer allows you to split your payroll direct deposit into different accounts, direct a specified amount of funds to the savings account. Tying your fund transfer to your payday lets you put savings on autopilot and prioritize savings before spending.

While putting your deposits on autopilot helps build your balance, it is important to continue to monitor interest rates and account terms. Interest rates, fees, and other account terms can change. Be realistic about the fact that this account is accumulating emergency funds or a balance you expect to use in the not-too-distant future. Putting your savings in a credit union or bank insulates the money from market fluctuations. Your savings account will never produce the returns of a brokerage account, but it will never produce losses, either.

There is a long-term savings benefit to using the right account to accumulate an emergency or special fund. Savings accounts allow you to earn interest, put your money safely aside, and easily access it when needed. Share savings accounts at credit unions generally offer higher returns and lower fees than traditional for-profit banks. Credit unions, such as Power Financial Credit Union, offer some of the best saving account rates in Florida.

We encourage you to contact PFCU to find out how we can help you achieve your saving goals.