Creating a strong financial support system gives you breathing room when emergencies hit as well as the confidence to work towards your dreams. Opening a savings account is an integral part of this process, both in terms of storing your money and growing it. Here’s everything you need to know about how savings accounts work and the most strategic ways to use them to your benefit.

Savings Accounts Explained

A savings account is a bank account that lets you house your money while simultaneously earning interest on the funds there. When you choose to use a savings account at a credit union, your money is automatically insured by the National Credit Union Administration (NCUA) up to $250,000.

You’ll also earn compounding interest on the funds you have in your account. This is an excellent resource for long-term growth, because your money continues to grow, even if you don’t deposit more funds into the account. While earning interest may not seem like a lot of extra money in the short-term, it can truly start to add up over time.

Limitations of Savings Accounts

Savings accounts are similar to checking accounts in the way you deposit funds and view your statements. However, there are also several distinctions that separate these two types of accounts.

One is that you don’t get a debit card or checkbook with a savings account like you would with a checking account. Instead, you can use the following withdrawal methods:

  • Use an ATM. (Only if you also have a checking account).
  • Make a withdrawal at your credit union teller counter or ITM (Interactive Teller Machine).
  • Set up electronic transfers.

To make transferring money as fast as possible, consider opening your main savings account at the same financial institution as your main checking account. You can easily link the accounts and transfer funds as needed. And if you have a mobile app for your credit union, you can move money around straight from your smartphone.

Savings Account Alternatives

A traditional savings account gives you easy access to your money. As you grow your funds, though, you might consider other types of savings accounts to hold some of your money. Here are some popular ones offered by most credit unions.

Money Market Accounts

A money market account acts like a hybrid of a savings and a checking account. You earn interest on your deposits, but also have the ability to write a limited number of checks each month. Interest rates are sometimes higher than what you’d find with a traditional savings account. The downside is that money market accounts usually come with higher account minimums, especially if you want to avoid paying a monthly fee.


A certificate keeps your money in an interest-bearing account for a set period of time. At TTCU, we offer share certificates* (the credit union version of a bank's certificate of deposit or CD.) The longer the maturity date of a certificate, the more interest your money earns. If you take out the funds early, you’ll pay a penalty on the interest earned. You can find certificates that range anywhere from a few months to several years. If you’re looking for a way to keep your savings out of reach, certificates can be a good solution.

How Much to Actually Save

The amount you should have in your savings account varies from person to person. At a minimum, consider putting away $500 to have on hand in case of an emergency. Since it’s tucked away in a savings account, you’ll be less likely to try and use it for things that aren’t true emergencies.

Once you reach that milestone, also consider saving between three and six months’ of expenses. This serves as a financial safety net in case you suddenly become unemployed or some other major life event happen unexpectedly. Both of these savings goals take time and you may wonder how aggressively you should try and reach them.

A good rule of thumb to consider is to include saving as part of your budget and regularly putting away at least 10% of your income. If you can afford to save more, you’ll accrue even more earned interest over time. It’s free money that can help you reach your financial goals as fast as possible.

Financial institutions are required to report all interest earned that is $10 or more to the IRS and send a 1099-INT to you so you can report this on your tax returns. How you are taxed on the earned interest is determined by your individual income tax returns and financial situation. If you have any questions about how interest is taxed, you should always consult a tax advisor. 

Opening Your Savings Account

It’s never been easier to open your own savings account. In fact, you have different options based on your own preference. The easiest way is to fill out an online application. If you’re not a TTCU member yet, it’s easy to join before opening your accounts.** Another option is to visit your local credit union branch in person. Not only can we walk you through the process, we can also help you evaluate your options to make sure you pick the best account possible.

Contact TTCU today to learn more about our savings accounts and how they can help prepare you for the future.