 Waiting for Higher Savings Rates Could Be Costly
If you are like many Americans who have been waiting for savings rates to go up before they invest in certificates, you could be making a costly mistake.
All of us are disappointed with the low yields available on regular savings, money market savings, and savings certificates. We remember the “good old days” of a few years ago when certificate yields were as high as 7.0%.
If you’re like many Americans, your savings are in low-yielding savings and money market accounts while you wait for rates to go back up. But, what is it costing you while you wait? As an example, if you had invested $10,000 in a 12-month certificate yielding 3.95% APY one year ago, you would have earned $395 compared to approximately $175 in our HiYield account. At that same time if you would have chosen a 24-month certificate yielding 4.05% APY would have earned $405 during the last 12 months and been locked in at that same rate for the next 12 months.
If you have money in low-yield savings accounts, consider moving a portion to certificates to improve the overall yield on your savings. For more information on savings certificates, contact our Members Services department – (810) 244-2200 or (800) 748-0451.
Coverdell Education Savings Account
When your children are young it's hard to imagine them strolling on a college campus or cramming for final exams. But it's never to early to save for your child's education … especially with today's rising cost of a college degree. Although contributions to an Coverdell Education Savings Account are not tax deductible, your withdrawals (including earnings) are tax free if used for education expenses.
- The sole purpose of the Coverdell Education Savings Account is to help pay for education expenses, such as tuition, fees, books, supplies and equipment. In some cases, room and board is also a qualified expense.
- Anyone who meets the income requirements can open and contribute to a child's Coverdell Education Savings Account. This includes grandparents, aunts and uncles, family friends, or anyone else who wants to pitch in to your child's college fund. However, the total contributions to all Coverdell Education Savings Account for each child cannot exceed $2,000 per year.
- The account will be in the child's name using the child's social security number. The child must qualify for Financial Plus membership.
- Contributions can be made until the child reaches the age of 18.
- Withdrawals for qualified education expenses will be tax free as long as all funds are used before the child reaches age 30.
- New for 2002 - Elementary and Secondary school expenses have been added to the list of qualified expenses that may be paid tax free.
- If the child does not attend college or leaves school before all the funds are withdrawn, the remaining funds can be transferred to another child in the family.
Individuals contributing to an Coverdell Education Savings Account can still fund their own Roth or Traditional IRA up to $4,000 per year, as long as the eligibility requirements are met.
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