I don’t know about you, but I did a pretty good job of banishing reality for a few weeks over the holiday season. I happily shopped for two kiddos, family, teachers, and hosted parties with fancy crackers, little piles of cheese, and lots of wine. Now that January is half over, it’s time to face the financial aftermath. My husband and I usually make a rough holiday budget and then… totally blow it. I know, I know. But I bet we’re not alone.
It’s time to get a little smarter about our money, and we’ll start by building back up our savings account so we’re not as worried about all the unforeseen problems that can happen. My husband’s car always seems to have something wrong with it and the other day the vacuum made an unholy squealing sound that has me resigned to think it’s not long for this world.
With tax season approaching, we should make a solid plan about how to save some of our refund and make sure it contributes to our current–and future–financial stability.
What is a CD?
We’ve been talking about opening up a CD, or Certificate of Deposit. A CD is a type of savings account that often offers a higher interest rate, but under the condition that you will leave your money untouched for a designated amount of time. Most lenders offer CDs, but they all vary a little, so you’ll want to go with a lender you trust.
Interest Now CD
Duluth’s local credit union, MCCU, has recently come out with new services to help their members reap the benefits of saving smarter. With an Interest Now CD, members can get their interest (up to 3.15% per year!) up front when they open a CD account. The term period–24 months–means you can’t withdraw your deposit for two years.
This may seem like a long time to sit on your hard-earned money, but it gives you a bit of assurance that your funds are safely tucked away. While no one likes to “dip into the savings account”, it happens from time to time, and saving money in an Interest Now CD is a great way to preserve your money for the future while reaping the benefits of getting your accrued interest at the beginning of the term.
Bump Up CD
Another way MCCU makes it easier for members to save is by offering a Bump Up CD. The term period is longer–with options of 36, 40, and 60 months–but you have the agency to ask for an increase in your interest rate once per agreed upon term. The rates are typically a bit higher with a Bump Up CD than an Interest Now CD because you are committing to a longer term. Tuck money away for something big–a down payment on a house, a family vacation (or a solo vacation, can you even imagine?!) and spend a few years planning. Your savings will be right where you left it and making you money.
Companion Savings Account
Need another reason to start saving with MCCU? The credit union also offers members the opportunity to open a Companion Savings Account. When opened with a CD, the companion savings account is set at a higher interest rate than a standard savings account. While you can’t add money to the account, you can make withdraws during the 12 month (or longer) term. It gives you some flexibility with your funds while still helping you take advantage of higher interest rates.
Start Small
Phew! That’s a lot of money talk. If you’re not sure you’re firing on all cylinders yet today (I’m still drinking my coffee, too), start small. When you’re a member with Members Cooperative Credit Union, you can get $15 off your fee for filing your taxes with TurboTax. Sure, that kind of savings might only buy you a pack of diapers or a weeknight pizza, but it’s the little things always add up. It’s also a great reminder to make 2019 your year to save.
