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I have discovered that the credit union pays much more interest on a CD than the regular savings account. I also discovered that you could put as little as $250 into a 60 month CD and it would get a rate as high as other area banks that were requiring thousands more than that small amount in order to get the higher interest. Then I discovered that you could have that interest dumped each month into a savings account instead of have it accumulate into the CD. That will give you a small amount of money each month if you should need it.
So here is the plan: Buy one CD a month, two months, three months or a year as you can afford to do so. Have the interest go to your required savings account (That's the account you have to have in order to be a member of the credit union.) Usually if you have to cash in a CD the only cost for doing so is the loss of the interest for the period. So the CD money is really still available to you in case of emergency. Since you will have several CD's you won't have to lose interest on more than you plan to use.
If you need to borrow money from the credit union, you can use these CD's as security and you can have the payments taken out of your paycheck. If you figure on the interest the CD is earning and the interest you are paying, you will probably come out better to borrow rather than cash in the CD. In other words, at the end of the loan payment period, you will still have your CD and the interest it has been paying will probably be more or close to more than you would have if you had cashed in the CD to buy what you wanted and made payments to yourself to bring your savings higher.
I wish someone had pointed these facts to me years ago when I was young, so I am doing that for you. Lucky credit union members.
One caution on this plan. If you borrow money using your CD as security, you will not be able to cash in that CD until the loan is paid. I wouldn't want to mislead anyone.
Always heard great things about SECU. They have been around a long time and have served the state employees in NC well from what I understand. Never have been fortunate enough to be a member though.
I wish someone had pointed these facts to me years ago when I was young, so I am doing that for you.
Not to be a curmudgeon, but what do you mean? Interest rates and terms of the account / investment vehicle are prominently posted in every credit union or bank branch. They're available on institution's website. What more would you reasonably expect in terms of "pointing out these facts" to you?
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