If you want to have more money to do stuff with, then setting up a savings account at a credit union is one powerful way to do so. Whether you want to save more as an individual or as a family, for emergencies or vacation, there is no shortage of information touting the benefits of setting up multiple savings accounts to reach your goals. Better yet, however, is setting up these other savings accounts at financial institutions that are different from your routine checking account. For instance, if you have a checking account at Bank A, you should aim to have a savings account at Credit Union A. By creating a higher barrier, and ultimately reducing the temptation, to transfer money from savings and checking, you increase your chances of hitting your savings goals.
Credit unions are special because they offer an alternative financial services experience to traditional banking institutions and might offer you the services you need to utilize those savings once you reach your goal. While you might be familiar with many of the benefits of credit unions over banks, none is more powerful than the lower rates (on average) one receives on financial products like mortgages and car loans. According to data provided by SNL to the National Credit Union Association, the biggest difference in rates between banks and credit unions shows up in car loans, both new and used. As a result, once you save enough money in your credit union savings account for a down payment on a car, you will be already be familiar with the level of service. While credit unions still have a ways to go in offering new financial products, such as a student refinanced loan, some regional banks and private companies like CommonBond (to reduce graduate school loan payments) and SoFi (to reduce undergrad and graduate loan payments) are filling in the gap to help consumers save thousands of dollars.
Nonetheless, history has played a huge role as to why these credit unions offer a differentiated experience to traditional banks. Originally, President Roosevelt's 1934 Federal Credit Union Act created a system to make credit available and promote thrift through a national system of nonprofit, cooperative credit unions. Over time, credit unions have expanded their service offerings to ensure that they can meet the basic financial demands of a growing clientele. Earlier this year, credit union membership surpassed the 100 million-member mark, a significant milestone for any system and an even greater feat for a system that is picking up the slack of traditional banks, as purported in The Guardian.
Similar to large banks, many credit unions offer you the ability to deposit checks right on your mobile devices. If you receive your regular income or extra money via check, then you will be able to deposit these funds into your savings account very easily. The list of credit unions with mobile check deposit is expanding too, and you can search for a local credit union to find out if they have the perks you need to make the leap. In order to make an informed decision on the right credit union for you, make sure that it actually offers you savings, simplicity, and service -- three pillars of any financial service. Many credit unions tout great service, but call and check out their online platform to see if it exceeds your needs.
Once you chose your credit union, or even if you already have one, commit to automatically depositing money into a credit union savings account from your paycheck if your employer offers direct deposit. If there is no salaried direct deposit or you get paid hourly, commit to writing yourself a check to your credit union savings account every month. In order to hold yourself accountable, ask a trusted friend to check in with you to see if you are making progress toward your savings goal. A good savings amount to strive for in this separate account is $3,000, and whether you use the money for a down payment or some trip in the future, it will be yours for the taking.
So, join a credit union and open up a savings account separate from your checking account at another financial institution. Remember that many credit unions have membership requirements, but even these eligibility restrictions started loosening five years ago. If you already have a credit union account, explore ways to increase your savings amount and reap the benefits of what credit unions have to offer.