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12-07-2012 at 7:14 AM
kellyrn995...
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Joined on 03-28-2010
Westminster, Maryland
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kellyrn9956 is not online. Last active: 05-20-2013, 8:45 PMGold

Credit Union vs. Bank vs. What?

I currently have almost $15,000 sitting in a savings account in a bank. Seems like I'm not doing something right here because obviously I am gaining atrociously low interest on this money and am not getting anywhere. So tell me what you would do. Should I invest some of this? Maybe join our credit union for a better interest rate? The one issue that I do have is that I need somewhat quick access in case of emergencies - like maybe a week. So I want to keep at least half of this in my current account. But the rest... I don't know what to do. Help!

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12-07-2012 at 9:09 AM
Sisugal
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Joined on 01-07-2007
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Sisugal is not online. Last active: 05-12-2013, 8:53 AMPlatinum

No one has good interest rates right now (and probably won't until at least after 2014 at which time they will look at the prime rate and make decisions (they decided to keep it at present rate until 2014)

We use a credit union and several different banks as well as ING - each designated for a different use.  Do not invest money you cannot afford to lose.  Fully fund your ROTH IRA before investing outside of retirement accounts.

Use some of the savings to pay off /down any credit cards and add extra to car payments  or mortgage (you are paying more interest of that money than the interest in savings)

 

 
12-07-2012 at 9:14 AM
kellyrn995...
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Joined on 03-28-2010
Westminster, Maryland
21,575 Points
kellyrn9956 is not online. Last active: 05-20-2013, 8:45 PMGold
Sisugal:

No one has good interest rates right now (and probably won't until at least after 2014 at which time they will look at the prime rate and make decisions (they decided to keep it at present rate until 2014)

We use a credit union and several different banks as well as ING - each designated for a different use.  Do not invest money you cannot afford to lose.  Fully fund your ROTH IRA before investing outside of retirement accounts.

Use some of the savings to pay off /down any credit cards and add extra to car payments  or mortgage (you are paying more interest of that money than the interest in savings)

 

Very good point.


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12-07-2012 at 11:50 AM
entropicbe...
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Joined on 01-18-2009
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entropicbeauty is not online. Last active: 05-20-2013, 7:49 AMNewbie
You could look into putting some of the amount into a money market account or a certificate of deposit account...the interest rates are slightly better in those scenarios, though for a CD you wouldn't have access to the money till the term is up...the longer the term the better the interest rate.

 
12-07-2012 at 12:40 PM
jtmh2012
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Joined on 02-08-2011
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jtmh2012 is not online. Last active: 05-20-2013, 8:52 PMBronze

entropicbeauty:
You could look into putting some of the amount into a money market account or a certificate of deposit account...the interest rates are slightly better in those scenarios, though for a CD you wouldn't have access to the money till the term is up...the longer the term the better the interest rate.

Most CDs have terms that you can break the CD, but you lose whatever interest accumulated over some period.  So in a true emergency, you can get to the money.  But you can't treat it like a savings account either.

 
12-07-2012 at 2:29 PM
brij2006
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Joined on 08-30-2011
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brij2006 is not online. Last active: 05-20-2013, 11:00 PMBronze

Check into a Retail Account. You have to put in $1,000 in order to open it, and you can pull from it X amount of times a year. It takes an average of 5 days to gain access to your money. So it is still liquid enough for what you are looking for.  It earns more interest than a regular savings account, but doesn't fluctuate as much as stocks.

Our account is earning about 5% interest right now, but last year it was at 3%. We figure it is still more than what the 1.2% at the bank would do.


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12-21-2012 at 2:34 PM
MoxieMummy
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Joined on 05-31-2010
129 Points
MoxieMummy is not online. Last active: 05-01-2013, 2:55 PMNewbie

I would consider a CD ladder. Put $3k into each if 5 CDs (or $5k into 3 CDs). Each CD will have a different maturity, so like 3mo, 6 mo, 9mo, 12mo, 15mo. (Or whatever works for you). When a CD matures, roll it over so that you'll still have a CD expiring every 3-6months. In an emergency, you can withdraw from a CD- you just risk losing some interest. If you ladder, you can choose to close as many CDs as you need, but this protects the interest in the accounts you don't need to withdraw from. 

 This is what we do with our emergency fund. We're getting the best interest we can without risk to the capital, and having to close 1-2 CDs early in an emergency is an acceptable risk for us.


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