We all know we should be saving some of our earnings each month, but what’s the most profitable way to do that? Notice that I didn’t say the best way — I said the most profitable way. This article deals with credit unions, the most profitable places that are 100% safe to keep our money. But the best way to deal with saving money safely is first to save enough for the interest it earns to be worth maximizing!
There is very little difference in putting our small savings in a bank, a credit union, an IRA at work, a safe stock-market mutual fund, etc. The difference for the average person is less than $100 per year. We need to save up several thousand dollars before spending time finding the best interest rate. Instead of trying to gain on saved money, we should learn how to spend less to begin with, then save the extra money until we have enough to invest or to earn a lot of interest!
There are lots of easy ways to spend less, and they’re much more profitable overall than the few dollars we can make by changing from a bank to a stock-market mutual fund or a credit union. We could save thousands of dollars by making our $20,000 car last 20 years instead of just a few years! And by learning how to stay healthy and not need to spend money on curing the body’s ills, we could save tens of thousands of dollars and a lot of physical pain!
Those sorts of methods are much better for us than earning more interest on our saved money. But if our goal is earning more interest (or, like me, we’re already saving on our car, healthcare, etc., and we want to earn more interest), then read on.
Places for our money other than credit unions.
Stock-market mutual funds, ETFs, etc. (low-risk ones, not risky ones) are the most profitable places for our money instead of no-risk banks and credit unions, according to most rich people. I agree, and while I’m not rich, I have the best stock-market success rate on the planet: 100%. No kidding. I’ve never sold at a loss, and I’ve earned about 15% “annualized gain” (or “interest,” if we’re using a banking analogy) on my money in the stock market for 25 years.
The problem with the stock market is that low-risk isn’t no-risk. It takes nerves of steel to endure the inevitable “bear-market” downturns without panicking. On paper, $10,000 investments dropping to $5,000 terrify all but the gutsiest of investors (like me, thank you very much!). So let’s not invest more in stocks than we can afford to lose. We really can lose it all if we’re unlucky enough to pick a General Motors or Lehman Brothers that goes bankrupt. My 25-year winning streak definitely involved some luck in addition to nerves of steel.
During those years, I still kept most of my money in banks and credit unions where it was completely safe. (OK, so maybe my nerves are just steel-plated.) Instead of banks/credit unions, many people keep their savings in their workplace’s 401K or IRA (Independent Retirement Account). Those plans have tax advantages and workplace bonuses that credit unions don’t, like “matching” that gives essentially free money. If a company offers that, employees usually take it. But long-term 401Ks, IRAs, CDs, and savings bonds tie up our money for years/decades unless we pay early-withdrawal penalties. Credit unions are the most profitable safe place to keep money “liquid” (withdrawable with no penalty).
A credit union.
A credit union is basically a bank run by its customers. Some credit unions are open to almost everyone and fully insure most money via federal/state government. A credit union may have specific membership requirements, but as explained below, fortunately the most profitable ones for us have few requirements. We can do almost everything at them that we can do at a bank: checking and savings accounts, loans, on-line banking, automated bill-pay, ATMs, etc.
Many charge us no fees each year and just a few dollars to join.
Since some credit unions pay us over 4000% of the ridiculously low interest that banks pay on our money, why not keep most of our money there? (That’s not a typo: 4-0-0-0. Four Thousand Percent!)
How to get 4000% more than a bank pays.
Banks today pay us far less interest on our money than they used to: nearly zero. The average is less than 0.1% (no, not one percent, but one tenth of one percent!). So our $1000 in a bank is worth about $1001 after earning interest for a year! But at a few credit unions, each $1000 would be worth over $1040. Many credit unions pay us 1% interest or so — 1000% of bank interest — with no work needed on our part. Some pay over 4%, with several requirements for us to meet each month. That’s 4000% more than bank interest, and even much more than CD interest.
The most profitable credit unions for us allow almost anyone in the US to become members. And they pay us 2%, 3%, 4%, or even more interest. Furthermore, they let us do all of our banking online! I’ve never even physically visited the credit unions that have been paying me 3% and 4% over the years.
Specific examples and details.
One of my two local credit unions pays me 1% interest on as much money as I want to deposit. It charges me $1 per month, and it requires nothing else from me. My other local credit union pays me 2.25% on up to $10,000. And like all other credit unions that pay very high interest, it requires me to use its debit card several times each month, but it requires nothing else. Both these local ones let me choose to do all my banking with them online or in person.
One of my out-of-state credit unions pays me 3% on up to $15,000. Each month, it requires me to use its debit card 10 times, log in online four times, and deposit $10. (I use PayPal to do that; other customers have their workplace do a monthly automatic deposit.) That credit union pays me $37 each month, so over the years it’s paid me thousands.
Most credit unions that require us to use their debit card several times don’t require any minimum amount. So I just go to the supermarket on the first of each month and buy each grocery item separately. Most customers use their debit cards often enough to meet the minimum easily without my single-item approach. My 4% credit union requires me to spend $500 per month on the card. Various other requirements can be part of credit unions’ big-payout plans, but they’re worth it!
Please concentrate on life’s big-ticket items first, like house, car, and health. But for those of us who are ready to make an extra $100 a year or who already have a sizable savings and want an extra $1000, join an online credit union and start raking in the dough!
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