Put a Little Extra Money in Your Pocket in 2018

Sponsored By: Palmetto Citizens Federal Credit Union

The personal savings rate in the United States has dropped precipitously over the last four years, and that’s bad news for consumers who have to turn to credit cards for unexpected expenses.

“When you don’t have emergency savings and rely on credit cards, you end up paying for it. Credit cards charge interest on the amount you borrow which continues to add up over time. Chances are if you didn’t plan for the emergency, then you also haven’t planned for an additional credit card payment,” said Chris Terlinden, Marketing Director of Palmetto Citizens Federal Credit Union.

One of the best ways to avoid a never-ending cycle of debt is to make a saving and spending plan and stick to it, he said. By taking a realistic look at your income and expenses and monitoring spending, you can make a plan to build a safety net.

Conventional wisdom is not to live above your means, but that doesn’t go far enough, Terlinden said. In order to save sufficiently, you need to live below your means, he said.

To get started, establish an emergency savings account of $500 to $1,000, depending on your income. Next, pay off non-mortgage debts starting with credit cards, prioritizing the ones with the highest rates.

“We recommend using the ‘debt snowball’ approach,” Terlinden said. “With a debt snowball, you pay off your smallest balance first. Then use that money to pay off the next smallest balance, and continue the process of reducing and eliminating accounts one-by-one.”

There are many traditional savings options to choose from, including certificates of deposit (CDs) and money market accounts, to help you save.

“The main differences between different types of savings accounts are the interest rate, whether the money deposited is tied up for a set term and the minimum balance requirements or other restrictions on the account,” Terlinden said.

“Before opening an account, you should determine what your needs are and any goals you may have. If you want to leave the money in an account for a set time and earn interest, a certificate of deposit may be a good choice. If you want access to your funds, but still want to earn interest, a traditional savings account or money market would be a better option.”

Palmetto Citizens offers several other programs to help members save, including a Savings Round-Up program in which debit card transactions are rounded up to the next dollar, with the difference transferred into savings.

“This is a simple and painless way to save,” Terlinden said.

The credit union also offers special 12-month term certificates that require smaller minimum opening balances – as low as $25 – that allow additional deposits during the term. Palmetto Citizens’ Save to Win certificate account even gives people a chance to win cash prizes up to $5,000 each time they make a deposit of $25 or more.

The credit union also offers a variety of financial education programs, such as online tools and calculators, free financial counseling, and free evening workshops on a wide range of personal finance topics.

Credit unions can offer such services because unlike banks that generate profits for shareholders, credit unions are not-for-profit organizations that return earnings back to members in the form of higher savings rates, lower loan rates and fewer fees. Just like banks are insured by the FDIC, credit unions are federally insured by the National Credit Union Administration (NCUA), which provides essentially the same insurance coverage on deposits.

If you’re looking for any type of financial account or loan, do yourself a favor and check with Palmetto Citizens by calling 803-732-5000, or visiting PalmettoCitizens.org.