One of the great benefits of being a UFCU Member is having access to a wide range of savings1 options. But how do you know which strategy is best for you? Here’s a primer on UFCU savings accounts to help you make the most of your investments.
Standard Savings Accounts
With only $5 required to open an account, a standard savings account is an ideal place to begin. These accounts are a good place for emergency funds with easy access and free withdrawals. Plus, as your balance grows, so does the interest you can earn through dividends, which are paid quarterly. UFCU even offers account options for minors to help them develop good savings habits. We recommend setting up regular automatic transfers from your checking account to establish a reliable routine.
Money Market Accounts
A money market account is a good short-term savings option that offers higher yields and flexible access to your funds. An opening balance of $2,500 is required, and earnings compound and are paid monthly. Members can sweeten those earnings even more, earning an additional .05% APY2 over the standard rate by making at least 10 qualifying checking account transactions monthly. Here again, regular automatic transfers from your checking account are a best bet.
Certificates
If you’re looking for higher interest rates and can park your savings for longer periods, a certificate might be a good option. With a $1,000 minimum investment, you can lock in your interest rate from three months up to five years. Dividends are paid monthly, and we encourage you to visit UFCU.org for the latest rates. You also can take advantage of rising interest rates with a UFCU Step-Up Certificate, which lets you “step up” your rate one time during a 24-month period. Note that early withdrawals on all certificates incur penalties, so carefully choose your investment period.
IRAs
Individual Retirement Accounts offer savers a way to grow their savings and reduce taxes.3 You can choose from traditional and Roth IRAs, with either fixed or variable rates. With traditional IRAs, contributions are tax deductible in the year they are made, and you don’t pay taxes on the contributions or earnings until withdrawing funds. If you expect to be in a higher tax bracket in retirement, consider a UFCU Roth IRA. With a Roth IRA, contributions are not tax deductible now, but withdrawals are tax-free.5 (There are limits on the amount you can contribute to each type of account and when you can make penalty-free withdrawals.)
There are multiple options to help you get savings savvy. Even young savers can get in on the action with Early Saver Certificates, which require only a $100 deposit. Plus you can rest easy knowing all savings are federally insured up to $250,000.
Savings | Money Market | Certificates | IRAs |
|---|
| Fee-free, insured, and easy to manage | Ideal for higher yield, short-term savings | Lock in a rate and let your funds grow | Let your funds grow and save on taxes |
| Withdraw anytime | Withdraw anytime | 3–60 month terms | 6–60 month terms (or withdraw anytime4) |
| Dividends paid quarterly5 | Dividends paid monthly5 | Dividends paid quarterly5 | Dividends paid quarterly5 |
| $5 minimum | $2,500 minimum | $1,000 minimum | $100–1,000 minimum |
| $0 monthly fee | $0 monthly fee | $0 monthly fee | $0 monthly fee |
1 Federally insured by NCUA up to $250,000
2 APY = Annual Percentage Yield
3 UFCU does not provide tax or legal advice. For such guidance, please consult a qualified tax and/or legal advisor.
4 IRS penalties apply
5Dividends are calculated by the daily balance method. Dividends are based on UFCU's earnings at the end of a dividend period, and cannot be guaranteed.
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