Savings Accounts vs. Certificates

July 20, 2023

With all the savings options that are out there, from basic accounts to longer-term Certificates, it might seem daunting when you try to choose the best place to put your money.

It all depends on your goals. Are you saving for the short-term – say a few weeks or months – or are you looking longer term as you build your financial future? A closer look at traditional savings accounts and Certificates can help you decide which savings path is best for you.

Saving for now – or sooner than later
Traditional savings accounts are great for shorter-term goals. You can set aside money for everything from books and school supplies to MSU season tickets to a fun spring break trip. 

Many savings accounts, including those at MSUFCU, pay dividends, adding a little more to your savings by paying a certain percentage on your deposits. You can also set up subsaver accounts – separate accounts within your main savings account. Name each account – “Books” or “Spring Break”, for example – and transfer money to them each month or with each paycheck. 

Subsavers make achieving your savings goals easier by focusing on specific goals. You can create up to 10 subsavers within an MSUFCU Spartan Saver account. We also offer a Savings BuilderSM account that pays higher dividends on lower deposits. You can use it as an emergency fund to set aside some money for a car repair, medical bill, or other unexpected expense.

Not so sure you can remember to put money in an account? Try setting up direct deposit with your employer or scheduling automatic deposits through your financial institution. You set the amount and it will be transferred to your savings account without having to move it yourself. Visit msufcu.org/savings for more information on our account options.

Certificates for later
While savings accounts are great starts and often work best for more short-term financial goals, Certificates are perfect when saving for longer term financial goals (think future tuition, a down payment on a car, or moving expenses as you approach graduation). 

Certificates pay more dividends than traditional savings accounts because the money is placed in an account for a set length of time, called the “term.” This means your savings will grow steadily at one rate. 

Certificates require minimum deposits and you typically cannot add to them, though MSUFCU has a 1-Year Add-On Certificate you can open with as little as $50 and add up to $10,000 per year. We also offer regular Certificate terms from three months to seven years.

If you’re looking to open more than one Certificate but you want a way to access your funds at different times if necessary, you can “ladder” Certificates. Let’s say you have $10,000 and you deposit $2,000 each into one-, two-, three-, four-, and five-year Certificates. By spreading out the terms, you can earn higher dividends while freeing up funds at different intervals should you need them without paying early withdrawal penalties.

Whether you want to save some cash for short-term expenses you know are coming up, set aside money for emergencies, or achieve a long-term financial goal, make saving a priority and set yourself up for financial success.

Tags: Savings, Tips and Tricks