Unlock the Full Potential of Your Savings
By: Mary Simmons, Vice President of Marketing, Philadelphia Federal Credit Union (PFCU)
Ambition, endless effort and a world of responsibilities–you’ve worked hard for your paycheck. Of course, bills and essentials should come out of your earnings first, followed by the temptation to splurge. But what about the portion that’s left over? If you’re simply parking it in an ordinary savings account, you’re not allowing your money to reach its full potential. The average savings account annual percentage yield (APY) across all financial institutions is only 0.45%. For example, if you had $10,000 in your savings account with an average rate, your money would only grow to $10,045 after one year. Why not let your hard-earned money grow to help achieve your savings goal?
There are a number of ways to receive a greater return on your savings, one being Certificates of Deposit, also known as CDs. Offered by financial institutions, CDs can give you a higher interest rate on your money in exchange for agreeing to not touch that money for a set period of time. The money could be withdrawn from a CD before the end of the set term in the event of an emergency, but you would be charged an early withdrawal fee. The terms can range anywhere from around 3 months to 5 years. CDs provide an opportunity to earn more off your own money than a typical savings account with less risk than investing in the stock market.
After you have made the decision to purchase a CD to help maximize your savings, it’s important to make sure you find one with a good APY. The national average APY on a 1-year CD is 1.74%. Philadelphia Federal Credit Union (PFCU) offers a 1-year Savings Certificate (same as a CD) well above the national average with a 5.25% APY. That means with the same $10,000, you only earn a dividend of $45 with an average savings account, but you would earn $525 with a 1-year Savings Certificate at PFCU. That’s $525 just for allowing your money to sit for a year. PFCU allows you to open a 1-year Savings Certificate with as little as $500. You can open 3- and 6-month savings certificates with just $250.
When it comes to interest rates, credit unions can often offer higher dividend rates on savings accounts than banks, helping your money grow faster, and lower rates on loans, making it more affordable to borrow money for a big purchase. A big reason for this is that credit unions, like PFCU, are not-for-profit organizations and profits are returned to their members. Meanwhile, banks often have shareholders who have a claim to part of the bank’s assets.
In order to get the most out of your savings, let your money work smarter for you. Consider opening a Savings Certificate so you can unlock your full savings potential.
If you’re interested in learning more about PFCU’s Saving Certificates, click here.This is a paid partnership between Philadelphia Federal Credit Union and Philadelphia Magazine