High-Rate Account Sparks Savings02.07.2018
Los Angeles Federal Credit Union in Glendale, Calif., has rolled out a new product to help members save: An “emergency” savings account that pays an interest rate 50 times higher than what other financial institutions pay, up to a certain amount.
The $925 million asset credit union started the new savings account in the wake of studies showing that many Americans have less than $500 saved in the event of an emergency. Los Angeles Federal decided to tackle the issue head-on.
Members earn a 3% annual percentage yield (APY) on the first $500 they save. That’s 50 times more than the .06% APY paid on the averages savings account rate at U.S. financial institutions tracked by GoBankingsRates as of Nov. 29, 2017.
The account requires a minimum deposit of $25. The emergency account must be set up to make a minimum $25 per month deposit into the account by automatic transfer, direct deposit, or payroll deduction. If no withdrawals are made, after one year the member would save $300.
Emergency savings account balances from $25 to $500 earn 3% APY, and balances of $500 to $1,000 earn 1% APY. Balances above $1,000 earn the regular share savings account rate. To earn 3%, members must sign up for online statements and maintain a $25 monthly minimum deposit.
Members may make one free emergency savings account withdrawal each month. Other withdrawals cost $2 each.
(via Credit Union Magazine)
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