Savings Account KnowledgePosted: March 9, 2021
If you’re looking for a safe place to grow your money without subjecting it to risk or making it inaccessible, a savings account can be just what you need. Here’s everything you need to know about this popular financial product:
Opening a savings account
Getting your savings account up and running is easy. Stop by our local branch or visit the West Texas Credit Union website for more information on how to open a savings account. You’ll need basic identifying documents and information, including a Social Security number or tax identification number, and a minimum initial deposit of $5.00.
Accessing your funds
Access to your funds in a savings account is more restricted than a typical checking account. For example, you won’t be able to write out a paper check against these funds, or withdraw cash using a linked debit card. The funds are more accessible than the money in a long-term investment option. If you do need to make a withdrawal, visit a branch location to do it in person. You can also transfer funds to another account using online transfers or bill payment.
Up until April 24, 2020, Regulation D — or Reg. D — was a federal rule that placed limits on the total number of convenience withdrawals a bank customer or credit union member can make from their savings account each month. A “convenience withdrawal” applies to online transfers and automatic payments linked to your account. Under Reg. D, members were still allowed to withdraw money by visiting their credit union and by making an ATM withdrawal after reaching their limit.
The Federal Reserve has removed the requirement for banks and credit unions to limit convenience withdrawals on savings accounts to six per month, but financial institutions are still free to impose this restriction as they determine appropriate. It’s best to find out about any withdrawal limits your banking partner may have before opening a savings account. West Texas Credit Union allows 6 savings account withdrawals each month.
Fees and penalties
Banking partners may charge a nominal monthly maintenance fee for savings accounts, but these can generally be avoided by meeting specified account requirements. Savings accounts at West Texas Credit Union have no monthly fee.
Bank and credit union members may be penalized for going over the withdrawal limit of their savings accounts. The withdrawal limit fee, or excessive use fee, typically ranges from $2 to $15 per transaction. Some institutions only penalize a member after repeated violations. It’s also worth noting that some credit unions will automatically convert the account into a checking account if the member exceeds the number of allowed withdrawals. Here at West Texas Credit Union, we charge a $5.00 fee for excessive withdrawals from the savings account.
You can avoid being penalized for going over the limit of withdrawals by recognizing that your savings account is not meant to be used for everyday expenses. If you do find that you need to take out money from savings during the month, try to make fewer withdrawals for larger amounts.
Higher earnings rate
One of the most advantageous features of a savings account is its interest rate (or dividend rate in the case of credit unions), which is nearly always higher than the rate of a checking account in that same institution.
According to the National Credit Union Administration (NCUA), in December 2020, the average dividend rate for credit union checking accounts was 0.08% Annual Percentage Yield (APY). The average rate for savings accounts was 0.11% APY.
Choosing to park your money in a savings account as opposed to checking means giving it a better chance at growth.
Safety and security
Whether you’ll be putting your emergency fund in a savings account, or you’re using the account to hold the money you’re saving for a summer getaway, keeping the funds safe and secure is crucial. Fortunately, your money is always safe at West Texas Credit Union. Our credit union is federally insured up to $250,000 by the National Credit Union Administration. Your money will also be protected from the fluctuations of the stock market, so you won’t need to worry about losing it in a market crash or unexpected decline.
A savings account can be an excellent place for keeping and growing the funds you may need to access in the case of an emergency. Call, click or stop by West Texas Credit Union to open your account today!