1-02 Bank and Credit Union Products


So, you just got your year-end bonus of $2,000. Now what are you going to do with it? Let’s review the obvious choices…

Most financial institutions, banks, credit unions, and savings and loan associations have a similar menu of investment products from which you may choose. Here are the most common and popular products:

Savings Accounts

The benefit of a savings account is that you can make deposits and withdrawals whenever you want, no questions asked. Plus, your deposit is protected by the full faith and credit of the U.S. government. If the bank ever goes belly-up, the Federal Deposit Insurance Corporation (FDIC), which is part of the U.S. Government, will guarantee your money up to $250,000 per person, per bank account. And in 2009, the FDIC has been very busy protecting the deposits for people in the 125 banks that went bankrupt!

From bank to bank, savings accounts are all basically the same, but you need to pay close attention to the fine print. The typical differentiators are:

  • Interest rate
  • Frequency of interest (earnings) posting periods
  • Different minimum balance accounts that pay higher interest rates if you maintain the minimum amount on a deposit
  • Fees for withdrawals, statements, etc.
Here is a savings account interest rate table from one of the leading U.S. banks:
Balance required Interest rate
$0 0.05%
$10,000 0.25%
$25,000 0.75%

So, as long as you are investing $250,000 or less, this is a very safe investment. On the downside, you can see that your return is practically nothing given the current interest rates.