As a not-for-profit financial cooperative, owned and operated for the members, you’re more than an account number – you are part of the Oak Trust family! Since there are no stockholders to pay, we are able to offer higher dividend rates on deposit accounts and charge lower rates on loans. Additionally, we offer a full range of convenient low-cost financial services that fit your lifestyle.
If you have been thinking of using money market savings accounts for a while now, it is important that you know what these accounts actually are and how they will benefit you. It is true that these are considered to be high interest savings accounts but at the same time there are certain points that might make you see them in a different light. Let us see here whether these accounts are something that you need to consider to build up your funds.
First of all, we need to see what these are. These are deposit savings accounts with a higher rate of interest than usual bank accounts. One of the most important advantages of having such an account is that the notice period for withdrawal is very short if it is present. Also, the money that is deposited in these accounts is protected by the regulations of the National Credit Union Administration (NCUA), which means that even if the financial institution shuts down operations, the money deposited in it is not forfeited.
So, there are advantages and it might seem it quite worthwhile to have one of these money market savings accounts for your needs. The two main aspects of any savings account – high interest rates and low withdrawal periods – both apply to savings accounts, making them seem good options. But then, there should be some catch somewhere, right? The truth is that there are certain things you have to know.
1. One of the first things that you have to remember here is that there might be a maximum number of withdrawals that you can make from the account. There are options that will allow you to dip into the account as many times as you need to withdraw money, but then there are also accounts with a maximum limit on them.
That could be a dampener for a running business if you are depending solely on this account for your transactions.
2. Though most of these accounts consider your deposit applicable for interest even if it is as low as $1, there are accounts that will need you to have some minimum balance in the account each month. This can again be a problem if you are strapped for cash, especially in the initial stages of a business, for example. The accounts that have a requirement of a minimum deposit per month will not give any interest for the month that the requirement is not met. So, even if there is a high rate of interest attached with the account, it might not work if there is this requirement to be met.
3. These options are also subject to fees like any normal savings accounts are. There are free accounts out there too, which do not impose any fees on the account apart from their normal account handling charges, but some accounts might charge more beyond a particular number of withdrawals or even penalize the accountholder for not maintaining the minimum balance.
But you must remember that these points do not apply to all. So what you really need to do is to read the fine print so that you clearly understand all the points that apply.
Certificate of deposits are some of the safest ways to invest your money for the future. They are federally insured to $250,000 by the National Credit Union Administration, and backed by the full faith and credit of the U.S. Government. Unless you invest more than this, there is no risk that you will lose any of the money that you have invested. Unfortunately, certificate of deposits also do not offer a very high return in comparison to other types of investments. This is the downside of having a guaranteed interest rate earned. It is still possible to earn a fairly high return, however. In order to make sure that you are getting the best CD rates possible, it is necessary to shop around. While you can certainly check with the Credit Unions by calling them up in order to find out what their rates are, it is much simpler to find the information that you are looking for through the use of the internet.
Certificate of deposits are deposits that you can make with a Credit Union as a form of investment. This is considered to be one of the safest types of investments that you can make because of the fact that the interest that you will earn off of the deposit is guaranteed. The compromise is that you will not have access to the money in the certificate of deposit for a specific period of time, at least not without facing a penalty. In most cases, this will be a reduction or elimination of the interest that you would have earned from the CD. The date that you have access to the funds once again is referred to as the maturity date. Typically speaking, the longer the maturity, the more interest you will earn. Generally speaking, the best CD rates are offered by the CD with the longest maturity, although there are many exceptions to this rule.
Because of the fact that a certificate of deposit gives the Credit Union full access to the funds for lending until the maturity date, the Union is able to earn more interest off of the deposit than in the case of a deposit in a savings account. Because of this, the Credit Union can pass on extra interest to the investor. For this reason, a certificate of deposit typically offers a higher interest rate to the investor than a savings account.
In order to find the best CD rates available, an investor will typically have the most success if they look for CDs with long maturity periods, and if they focus on online Credit Unions. The longer the maturity period, the more time the Credit Union has to earn interest on the funds.
At Oak Trust, you can invest in a CD with as little as $500 and for time periods ranging from 6 months to 5 years. You will not only earn a competitive yield, but you’ll also be guaranteed safety as there’s no risk in reaching your savings goals.
Five years after the collapse of major banking institutions Lehman Brothers and Bear Stearns, Americans still don’t trust big banks with their money. A 2013 Gallup poll found that 74% of Americans had “some or very little confidence” in banks, while only 10% said they had a “great deal” of confidence.
Part of the distrust comes from the fact that banks are fundamentally profit institutions, meaning they’re more likely to take risks with your money, and will often sock users with high fees and have low rates on deposit accounts. With a credit union, on the other hand, you are more likely to see lower fees, get slightly higher interest rates, and experience better customer service.
Despite these advantages, less than one-third of Americans use credit unions. If you’re not quite convinced credit unions are the right path for your finances, here’s a breakdown of the pros and cons of each.
Big banks: They offer the accessibility factor. ATMs are typically plentiful and branches are open on the weekend if ever you need to make a quick withdrawal or deposit. On top of that, most major banks offer a wealth of mobile and online tools that make banking on-the-go a cinch.
Credit unions: Because credit unions are meant to serve local communities, they are most often not available outside of that area, and branded ATMs are practically nonexistent. To compensate, most credit unions will offer to reimburse customers for ATM fees if customers have to go out of network, which means you could basically use any ATM for free or use a shared ATM network. And since many credit unions also offer mobile banking options, customers can search for nearby ATMs in their area. However, some credit unions cap the amount they’ll reimburse for ATM fees, typically around $15 per month.
The winner: Draw
Checking Account Fees:
Big banks: Big banks are notorious for levying major fees against customers for everything from overdrafts to monthly maintenance fees, and they’ve only gotten worse. According to a MoneyRates.com survey of bank fees, the average monthly maintenance is about $12 — that’s an extra $150 out of consumers’ pockets per year. Overdraft fees average more than $30. And then there’s the charge for using out-of-network ATMs, which runs about $3.
Credit unions: Unlike retail banks, which have large overhead costs and spend a lot of money to manage millions of accounts, credit unions are typically smaller operations and are able to pass on their overhead savings to customers. That means fewer fees across the board. More than 70% of the largest credit unions offer free checking, compared to 39% of banks, according to Bankrate.com. Overdraft fees run around $20 to $30 a pop, and while many do charge monthly maintenance fees ($2 to $5), customers don’t have to keep anywhere near as much cash in their accounts to escape them ($30 or less in most cases), according to Bankrate.com.
The winner: Hands down, credit unions are friendlier on the fee front.
Big banks: Good luck finding an interest-yielding bank account in this day and age. Interest rates fluctuate all the time, and even savings accounts at big banks are yielding next to nothing for account holders. We recommend doing your homework using a tool like Nerdwallet’s interest rate tracker or Bankrate.com to compare interest rate offerings.
Credit unions: Credit unions are known for offering higher-yielding savings and checking accounts, but recently, they haven’t been much to call home about. A 2012 study by Bankrate.com found that nearly 70% of major credit unions do not pay interest on checking accounts and those that do, yield an average of 0.12%.
The winner: Credit unions do offer higher-yielding accounts, but rates are so low it’s probably not enough to convince bank customers to go through the hassle of switching banks.
Big banks: Banks had a better year with customers in 2012, scoring a 77 on the American Customer Satisfaction Index; an increase of 2.7% over the previous year. But the ACSI chalks up the gains mostly to JP Morgan Chase’s 6-point gain in customer satisfaction. It remains the nation’s largest bank, “but still trails the small banks, which tend to offer more personalized service, free checking, and lower fees,” the report says.
Credit Unions: As the saying going goes, more money means more problems. As credit unions have been inundated with new customers, their customer service rates have taken a hit. Customer satisfaction with credit unions fell 5.7% to an ACSI score of 82 in 2012, though it’s worth noting they were still rated the highest overall for banking services.
The winner: Once again, credit unions beat big banks. But as their customer base grows, it will be crucial for the industry to ramp up resources to meet demand.
THE VERDICT: Credit unions are better.
We get it. Big banks are attractive, with their vast array of credit products, flashy commercials, and glossy logos. But for the most part, credit unions are hard to beat. If you are able to take advantage of a credit union and don’t mind the lack of branded ATMs and physical branches, they are by far the best option for banking today. Oak Trust Credit Union overcomes the lack of their own physical branches through cooperative shared branching, and have opened up access to nearly 6,000 retail locations. When it comes to using ATM services, they offer nearly 30,000 surcharge free ATMs in the Co-op network nationwide.
At the very least, it’s worth opening a checking or savings account with a credit union, based on their fee structure alone. You’ll pay fewer fees and get more personalized services out of the deal as well. If they don’t offer the credit products you like, trust us, banks will still be more than thrilled to take you on as a borrower.