3 Savings Strategies that Make Sense Right Now
July 26, 2022 by Chevron Federal Credit Union
Seemingly entrenched inflation is making many of us wonder about the value of our savings, as we’re forced to reset our expense budgets to deal with rising prices.
Indeed, the Consumer Price Index soared 9.1% in June from a year ago, surpassing economists’ estimates. That level marked the fastest pace for inflation since November 1981.
In its push to tame this tempo, the Federal Reserve pledges even more interest rate increases during the second half of the year. But is there a silver lining for savers in the Fed’s continuing rate hikes? The rate of interest earned on your bedrock savings accounts is also heading up. With these trends in mind, how can you refocus and re-engage with savings goals? Here are three ideas to review now.
Reassess where you keep your rainy-day fund
It’s no surprise that budget plans may have needed a tune-up in today’s economy, and certain savings goals may have gotten either put aside or mixed in with everyday spending. It happens — but it’s better to keep emergency funds separate from other accounts in an easily accessible place that can earn you more.
Action step: With a Sub-Savings account, you can easily keep rainy-day savings apart from other deposits. What’s more, your credit union’s high-yield savings solutions give you higher dividend rates and greater flexibility to access your money when you need it.
Take advantage of your “MarketEdge”
Because credit unions serve their members and not investors, they can offer higher interest rates on savings accounts — an important plus when it comes to helping your money grow. The proof? Evidence from the most recent NCUA quarterly data shows that average credit union savings rates outpace banks in almost every savings category, from CDs to money market accounts.
Action step: We’ve recently raised our rates for our MarketEdge Money Market Savings account. These rates are consistently six times higher than the national average, and you don’t have to give up convenience to get these better yields. This account is easily accessed through checks or a debit card.
Consider share certificates
Like certificates of deposit (CDs), share certificates offered by credit unions are also currently paying higher rates on average than banks. In times of moving yields, spreading cash among a few certificates with staggered maturity dates can help balance earnings with regular access to portions of your money. Known as laddering, the idea is to build a few “rungs” by opening a three-, six- and nine-month certificate. As they mature one by one, you can decide whether it makes sense to roll over the funds into a new CD or withdraw them based on current rate changes or your needs.
Action step: When interest rates are increasing, focus on certificates with shorter-term maturities to take advantage of higher rates sooner.
Monitoring your savings strategy
As the direction of the economy downshifts, think about targeting stable investments in your savings goals that can deliver secure growth. Keep an eye on all of our competitive rates on a host of member savings products — and see how one or more of them can best suit your financial needs.