MADISON, Wis. (3/6/14)--A CreditCards.com article highlights how credit unions are helping members save for big expenses through savings clubs.
Savings club accounts, a spin-off on the traditional Christmas Club accounts, help members set aside money on a monthly basis, and then withdraw it at a certain time.
Some banks offer savings clubs, but consumers are more likely to find them at credit unions, because the accounts aren't designed to generate profits, Ben Rogers, research director at the Filene Research Institute, told CreditCards.com. Because credit unions are not-for-profit and owned by their members, they're more likely to offer savings clubs, he explained.
Credit unions offer savings clubs for almost every major expense--tax payments, fuel bills, vacations, weddings, to name a few.
"Putting a little aside for any kind of big expense makes a lot of sense," Mike Schenk, vice president of economics and statistics with the Credit Union National Association, told CreditCards.com.
The club's also offer a great way to develop a savings habit, said Wes Strickland, senior vice president of marketing at Grow Financial FCU, Tampa, Fla.
And by saving, consumers avoid racking up credit card charges or digging into emergency savings to cover costs, the article reported.
Because some club accounts have specific terms, it's important that consumers understand account requirements. For example, deposits are often required at regular intervals, such as once a month, and withdrawals may only be allowed at a certain time or the account will be subject to closure or interest could be forfeited. Those restrictions help account holders stick to their savings plan.