Whether you’re socking away funds for retirement or stacking cash for a down payment for your first home, there are better ways to put aside money than a simple savings account. Time to look at your options and grow your money instead of sitting on it.

The average American household has $16,420 in savings in 2016, according to Magnify Money. And about 78% of households had their money placed in at least one type of typical savings account, be it a standard savings, retirement or money market investment account.

But there’s more out there — accounts that offer flexibility and, most importantly, a bigger return on your investment.

“Whether you’re putting aside money for a rainy day fund, home ownership or even retirement, it’s important to know which savings options are best for you,” said Susan Longley, Vice President of Servicing Operations at American Airlines Federal Credit Union. “And understanding the benefits of short- versus long-term savings will help you choose the product that best fits your needs.” 

Set it and forget it.

Unlike other investing opportunities, share certificates (also known as Certificates of Deposit or CDs) are federally insured, making them a lower-risk option. The idea is simple: You agree to put a certain amount of money away without touching it, and your financial institution pays you a higher interest rate than a typical savings account.

Share certificates are issued for a fixed period of time, typically one to five years. You choose the amount of money to invest and the set amount of time. But remember, that time is set in stone. Pull your funds out early and you will be penalized for early withdrawal if the funds exceed the dividends earned to date.

“This type of savings account is ideal if you have money that you won’t need immediately,” explained Karen Turner, Manager of Deposits and Statements at American Airlines Credit Union. “Share certificates offer a higher yield on those funds.”

Save. Cash in. Repeat.

Long-term investment with higher rate of return? Short-term investment with lower rate of return? Laddering share certificate options offer the best of both worlds. Laddering is simply investing in several share certificates at one time with different maturity dates.

By investing in multiple certificates, you’re able to take advantage of longer term certificate rates, which ultimately leads to a bigger payoff.

When that first ladder matures and you need the money to fund something important, you can cash it in and enjoy the benefit of the money working for you. But remember, even though there are no penalties, you’ll lose that ladder rate if you break it before maturity.

Dream it. Save for it.

Need a down payment on a home or enough cash to take that dream vacation to explore Europe? These are dreams to be realized … and funded.That’s what long-term savings accounts are for.

With the Credit Union’s Dream Plan, for example, you can sock away money for five years, and there’s no set amount you have to contribute other than a minimum monthly investment of $25. And bonus, if you decide mid-term you need the funds for a down payment, you’ll be able to pair the Dream Plan account with the Credit Union’s mortgage product, without incurring a penalty.

- Jennifer Robertson Norris

What the Credit Union can do for you

We offer a unique suite of savings products to help members make the most of their savings.

Share certificates: You can help your savings reach new heights with these federally insured certificates, which pay a higher dividend rate than typical savings accounts.

Share Certificates Ladders: By opening multiple share certificates with staggered maturity rates, you get the benefit of a higher dividend rate than you would a single certificate. The Credit Union offers the choice of two-, three- and five-rung ladders.

Dream Plan: Automatically deposit a specific amount each month for five years. Money stays put, dreams become a reality. Choose to do your mortgage with the Credit Union and use your Dream Plan account at any time with no penalty. Start your dream plan with as little as $25 and deposit as much as $50,000.

IRA Share Certificates and Ladders: If you have funds in an IRA, you can put that money to work for you by investing in IRA share certificates or IRA ladders. The Credit Union also has IRA plans available for traditional, Roth and Coverdell Education Savings Accounts.

All of these can be a little complicated to sum up quickly, so when in doubt, it’s always best to stop by a branch, call us at (800) 533-0035 or learn more here.

- Jennifer Robertson Norris