Which Savings Account is Best?

Why Even Have a Savings Account?

“Living without savings accounts traps you in a paycheck-to-paycheck mind frame,” says Edna Narum, CPS IBEW FCU Chief Financial Officer. “When you’re in that mode, it’s nearly impossible to get ahead.”You’ve likely heard of the “latte effect”: spending a few dollars a day or week on empty indulgences (like a drive-thru coffee or a streaming service you haven’t watched in months). If you put the amount you’d spend on two Starbucks lattes a week, you’ll have more than $500 saved up each year. Plus, as we’ll highlight below, many savings accounts offer dividends, allowing your money to grow as you save. 

Another big benefit to having a savings account or using multiple savings accounts for different purposes is the psychological effect of out of sight, out of mind. When we have all our money in one “bucket,” we tend to drain that bucket aimlessly. Separating your money into different accounts creates a barrier that can curb that temptation to impulse spend. It’s still there when you need it, but it’s earning you money and staying just a little further out of reach in the meantime. 

Why Use Separate Accounts?

Separate savings accounts provide an additional layer of smart money planning. An easy way to start is to have an emergency savings account separate from your regular savings account. More than half of Americans have less than three months’ worth of emergency savings set aside. Saving up that much is difficult, but it’s even more problematic when that money is constantly depleted for other reasons. 

Let’s use current CPS IBEW FCU accounts as examples of how separate savings accounts can work:

• A Regular Share Savings Account can be a great place to park money you’re not sure when you’ll need or you’ll want to tap into within the next six months. There’s no minimum balance, only $5 minimum deposit to open, and you can take the money out or transfer it to your checking account at any time with no penalties. There’s a youth savings account version, too. 

• Our Christmas Club Account is a popular way to make saving for the holidays pain-free. About 56% of shoppers have purchased through “buy now, pay later” services they couldn’t pay off. You can avoid these types of traps by using payroll deductions or auto transfers into a Christmas Club Account throughout the year. It has a higher dividend-earning rate than the regular savings account, and—like magic—the funds are transferred into your primary share account on the first business day in November. Just in time for holiday shopping! 

• Share Certificates of Deposit are lesser-known accounts with huge interest-earning potential. If you have at least $1,000 that you plan to hold onto for 6 to 24 months or longer, they can be a valuable consideration. Money Market Accounts can also be a great way to make your savings work for you (by earning you even more) over a longer period. You can start one with a $2,500 minimum balance. 

There’s also a secret weapon that you can add to your savings strategy. Our Easy Saver Program harnesses the power of the latte effect. When you make a debit card purchase, the total cost is rounded to the nearest dollar, and the difference is deposited in either your regular savings or your Christmas Club Account. You’ll be surprised at how quickly those nickels and dimes add up!

Take a look at each of these options and current offers on our CPS IBEW FCU Savings page here. And happy saving!