Why Now is a Great Time to Boost Savings
Rising interest rates means higher returns on your savings.
While most people know that saving money is key to a comfortable financial future, many fail to do it regularly. Whether because of a lack of discipline, a recent bout of unemployment, or another money emergency, growing a hefty savings balance is often necessary to weather a financial storm without using credit cards or loans. Regardless of your circumstances, now is an excellent time to kick-start a consistent savings habit.
Here are five reasons to grow your savings fund today.
1. Savings accounts are low risk.
Financial market volatility can be scary. It’s even more frightening when your savings are tied up in individual stocks or mutual fun
ds. Unlike other savings vehicles, a savings account provides a way to protect the principal balance while earning interest with each deposit. The more money placed into the account – and left untouched - the higher overall returns you can expect from your efforts.
2. Savings accounts allow you to earn interest on the balance.
You'll likely notice a stark difference when you compare the interest paid on a checking account balance to that available on savings accounts at the same financial institution. The difference is that checking accounts are convenient for managing cash flow, but they’re not designed to hold large sums of cash for extended periods. This might explain why they pay dividends much smaller than other accounts at an institution.
Plus, trying to save money in the same account used to cover expenses makes it easy to justify a random splurge or another unnecessary spend. Instead, tuck your savings into a designated account to remove the temptation and support your decision to grow a rainy day fund while earning interest on the balance.
3. Savings account interest rates are on the rise.
The Federal Reserve is expected to hike interest rates even further to tamp down inflation. While it’s becoming more costly to borrow funds, savings accounts are paying higher dividend rates on balances. Compare accounts across financial institutions since many offer competitive rates and other perks to get you to deposit funds at their institution.
4. Savings accounts are secure.
Placing large amounts of cash in a tin can or hiding it under your mattress isn’t safe. Your savings could be destroyed in a fire or stolen with no way to recover your losses. If you grow your savings at an NCUA-insured financial institution, like Credit Union of Colorado, deposits are secured by the federal government for up to $250,000 per account.
5. Opening a savings account is easy.
Opening a savings account at a bank or credit union is simple to do online or in person at a nearby branch location. Most require at least one form of a government-issued ID and an initial deposit of at least $5. Growing your balance is as easy as setting up auto transfers from a checking account or linked external account.
A savings account is a tool you can use to support your money goals. Gain the peace of mind that comes with financial confidence and open a Credit Union of Colorado deposit account today!