Elder financial abuse refers to intentional or unintentional neglectful acts by caregivers, family members, friends, or other individuals that cause financial harm to senior citizens. Elder financial abuse and fraud costs senior citizens between $2.6 billion and $36.5 billion annually. While elder financial abuse happens frequently, it’s not always recognized or reported. Knowing the signs of abuse can help detect and prevent harm to senior citizens.

Warning Signs of Elder Financial Abuse

Changes in seniors’ banking activity or transactional patterns are some of the most common red flags for elder financial abuse. Some warning signs to look out for include:

• Accounts that are frequently overdrawn that weren’t before
• Requesting or using a new debit card when the senior hadn’t used one in the past
• Closing of share certificates without regard for penalties
• A third-party being added to an elderly person’s account as a joint signer or power of attorney
• New or more frequent internet banking use
• Individuals who show an excessive interest in an elderly person’s finances who are either not on the account or have been added recently

Common Elder Financial Abuse Tactics

One of the most common tactics for elder financial fraud and abuse are romance scams. Oftentimes, seniors may lose someone close to them and experience loneliness. As a result, they turn to online dating websites or other channels to meet others. Romance scammers on these channels will then build a relationship with a senior to take advantage of them. This process can take months as the scammer works to build trust with the elderly person.

Eventually, the scammer will ask the senior to send them large amounts of money – sometimes under the guise of a family emergency or home repair. Once the funds are sent to the scammer, it’s very unlikely they can be recovered. This can have a devastating effect on an elderly person, especially if retirement funds are lost.

According to the Consumer Financial Protection Bureau, some other common scams and tactics include:

• Tech support scams, where a senior receives a call, text, or email from someone claiming to work for a tech company in order to steal personal information and/or money under the guise of fixing a technical problem or lapsed subscription
• Lottery, contest, or sweepstakes scams, where an elderly person receives notice that they’ve won money, and that they need to pay fees or taxes to get their prize
• Calls or texts that impersonate the government, a financial institution, or other organization requesting personal information like account numbers or a Social Security number

How to Prevent Elder Financial Abuse

Keeping lines of communication open is key to recognizing and preventing elder financial abuse. Help educate elders about common financial scams and talk with them on a regular basis to understand what their typical day to day looks like. That way, if there’s a change in behavior, you can address it right away.

It can be difficult to have a conversation with a senior about financial abuse. This is a contributing factor to it often going unreported. Seniors may stay silent about abuse to avoid embarrassment. As a friend, caregiver, family member, or neighbor of an elderly person, letting them know you’re looking out for them can make the topic easier to discuss.

Raising Awareness and Reporting Elder Financial Abuse

Elder financial abuse is a growing issue. Talking about it with the seniors in your life can help prevent it, even if it’s embarrassing or difficult to talk about. If you suspect that a senior is a victim of financial abuse, you can report it to your local Adult Protective Services office. You can locate one near you through the National Adult Protective Services Association.

This blog was written to commemorate World Elder Abuse Awareness Day on June 15, 2024. Visit the UN website to learn more.

When you join a credit union, you become part of a financial institution that is more than just a place to bank. You’re part of a global movement of more than 393 million members around the world who follow the long-held credit union philosophy of “people helping people.”

But what exactly are the differences between a bank and a credit union, and how do credit unions benefit members?

Read on to learn more about the seven key benefits of credit unions.

1. Credit Unions Are Member-Owned

Unlike banks, which are owned by shareholders and return profits to their owners, credit unions are not-for-profit financial cooperatives, owned by their members — or customers.

There’s a common misconception that it’s hard to join a credit union. While it used to be true that most credit unions were based on a “common bond” approach and members had to work at a certain organization or worship at a specific church to be able to join, many credit unions now have community charters. This means if you live in a certain geographic area, you may be able to join a local credit union.

2. Credit Union Members Have Voting Rights

All credit union members are allowed to vote on important credit union decisions, including who sits on the volunteer Board of Directors. That’s because when you become a member, you also become a co-owner of the credit union.

Credit unions are required to invite members to join their annual meetings, where their Board of Directors and executive leadership team presents the previous year’s financials and plans for the upcoming year. Members can also vote on policies. This ensures that a credit union’s decisions are made in the best interest of their members.

3. Lower Loan Rates, Higher Savings Rates, and Reduced or Eliminated Fees

Because credit unions are not for-profit, they give back to their members in the form of lower rates on loans, higher rates on savings, and reduced or eliminated fees.

As not-for-profit organizations, credit unions often focus on serving underbanked populations. This includes offering loans that help build credit, as well as checking accounts for those who need to rebuild or establish positive financial history. 

4. Credit Unions Provide Financial Education

Credit unions recognize that for individuals to achieve their financial goals and contribute meaningfully to their communities, they first need a solid foundation of financial knowledge.

To that end, many credit unions provide workshops and educational opportunities for members and the community so they can improve their financial literacy. In fact, credit unions offer financial education services that some banks don’t — such as housing and financial counseling.

5. Credit Unions Are Community Focused

When members bank with credit unions, they’re not only doing it for the betterment of their own financial well-being, but for the empowerment of their local communities. Because outreach is at the heart of credit unions’ core values, they work hard to provide valuable resources and tools for individuals striving to secure their financial future.

Credit unions also often offer volunteer opportunities for employees to contribute meaningfully to their local communities, such as working at food banks, reading to children, cleaning up communities, and participating in financial literacy workshops.

Some credit unions offer scholarships to members and employees. Together with their employees and members, credit unions truly make a difference, empowering people to transform their lives through improved economic stability and financial freedom.

6. Credit Unions Offer Cooperative ATMs and Shared Branching

Not only do credit unions share knowledge and resources with one another, they also participate inshared branching and a cooperative ATM network. This means that credit union members can visit the branches of other credit unions in their network to access banking services. With more than 5,600 branch locations nationwide and nearly 30,000 ATMs, credit union members can easily bank throughout in the United States.

7. Deposit Insurance

Banks federally insure their accounts up to $250,000 through the Federal Deposit Insurance Corporation (FDIC). Credit unions have the option of insuring their accounts through private insurance or being federally insured through the National Credit Union Association (NCUA). At GLCU, member deposits are insured through the NCUA, carrying the full faith and backing of the US government, up to $250,000.  

Key Takeaways on the Benefits of Credit Union Membership

Here are a few key takeaways about the benefits of credit unions:

• Credit unions are not-for-profit financial institutions, whose members are their owners
• Credit union members can vote for who sits on the volunteer Board of Directors
• Credit unions offer lower interest rates on loans and higher interest rates on savings products
• Community outreach and financial education are at the heart of the credit union philosophy of “people helping people”
• Credit unions collaborate with other credit unions, including participation in shared branching and ATM networks
• Member deposits are privately or federally insured

When you bank at a credit union, you can rest assured that you’re contributing to the greater good and the betterment of your community, supporting financial empowerment and the credit union philosophy of “people helping people.”

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our many educational resources and outreach efforts, we also give back to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening an account today.

The information in this post is for educational and informational purposes only and does not constitute investment advice. You should consult a licensed financial advisor before investing in any financial product or service.

Figuring out how to pay for medical expenses can be daunting. A health savings account (HSA) allows you to put money aside to pay for medical expenses. HSAs also have certain tax benefits and allow you to pay for qualifying healthcare expenses tax-free.

But what exactly is an HSA, and who is eligible to open one?

Read our blog to learn more about the features, benefits, and requirements of HSAs.

What Is an HSA?

An HSA is a personal savings account designed to pay for certain healthcare costs for people covered under an HSA-qualified high deductible health plan (HDHP). An HDHP typically costs less than a traditional health insurance plan, so you can put the money you save on your insurance premiums into your HSA.

One of the key benefits of an HSA is that you can make tax-free contributions to your account. You can also withdraw money from your account tax-free. Your HSA contributions aren’t included in your taxable income for federal taxes. You can also use your funds to pay for eligible medical costs for your partner and dependents (if they qualify), even if they’re not included in your HDHP coverage.

Like other types of savings accounts, you can earn interest (dividends) on your HSA funds. For example, you can earn 1.50% APY* on a Great Lakes Credit Union HSA. With an HSA, you can grow your savings over time.

And unlike a flexible savings account (FSA), you can save your unused funds for future expenses. Money in your account is always yours, even if you change employers or switch financial institutions.

Anyone can contribute money to an HSA. Typically, the account owner or their employer contributes to the account. However, there are limits on how much you can contribute to an HSA each year. The maximum amount you can contribute to your account each year depends on:

• Whether or not you are eligible for a contribution, and if so, if you are eligible for a catch-up contribution
• What type of HDHP coverage the owner has throughout the year (self-only or family)
• How many months the HSA owner is covered by a qualified HDHP

Total contributions made by or on behalf of an HSA owner cannot exceed the annual contribution limit for the given year. For more information on contribution limits, check out IRS Publication 969.

What Expenses Can I Use My HSA For?

You can use your funds to pay for certain IRS-approved items, including:

• Doctor’s visits
• Prescription drugs
• Eye exams
• Dental work and orthodontia
• Physical therapy
• Hearing aids

With the flexibility an HSA provides, you can pay for your medical expenses through checks, debit cards, or transfers. You can check IRS Publication 969 for a full list of approved expenses. HSA funds used for non-qualified medical expenses are subject to income tax, addition to a 20% tax.

Am I Eligible for an HSA?

There are a few requirements you’ll need to meet to determine if you’re eligible to open an HSA. You can open an account if:

• You’re covered under an HDHP
• You’re not covered by any other health plan (like a spouse’s plan, for example)
• You’re not a Medicare recipient
• You cannot be claimed as a dependent on someone else’s tax return
• You haven’t received veterans’ medical benefits in the previous three months

If you’re unsure if you’re covered by an HDHP, you can reach out to your insurance provider and ask. HDHPs must also meet certain requirements, which vary depending on if the HDHP covers just you, or your family, too.

Key Things to Know about HSAs

An HSA is a savings account that can be used to pay for certain healthcare costs, including doctor’s visits, eye exams, dental work, and more. HSAs offer certain tax benefits, including tax-free contributions and withdrawals and are available to people covered by HDHPs.

With an HSA, you can save and spend your funds in a way that works best for you. If you’re enrolled in an HSA-qualified HDHP, it’s never too late to open an account and start saving money to support your health and financial well-being.

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our educational resources and outreach efforts, we also give back to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening an HSA today.

The information in this post is for educational and informational purposes only and does not constitute investment advice. You should consult a licensed financial advisor before investing in any financial product or service.

* APY = Annual Percentage Yield. All dividend rates and APY may change at any time.

Glory and her husband Isaac moved from Nigeria to America in 1993. The couple rented an apartment next to GLCU’s Chicago Uptown branch, where Isaac took care of all the household finances.

After Isaac passed in the spring of 2020, Glory fell behind on her rent. Her property management company had a history of not communicating well with tenants, which didn’t help. On top of that, after not making any rent payments for a year, Glory fell victim to scammers, leaving her virtually destitute.  

Once she understood she could be evicted, Glory made an appointment with the GLCU Foundation for Financial Empowerment. There, she met with John Borthwick, senior housing counselor. John helped Glory organize the necessary paperwork and even taught her how to access her email. Then, he helped her apply for the Illinois Rental Payment Program and tracked her application.

Throughout this time, John continued to help Glory navigate the application process, create an affordable budget with the income from her part time job, and talk about managing expenses once she was current on rent again.

Unfortunately, they soon found themselves hitting another roadblock. A payout error caused only $6,400 of Glory’s $8,200 balance to be paid in the summer of 2022. John tried to contact the Illinois Housing Development Authority and the property manager to fix the error, but once the payment had been received, they could not revisit the application.

Glory did her best to try and pay when she could, but the remaining balance kept growing and by the spring of 2023 she found herself in eviction court. John enlisted the help of Chicago Volunteer Legal Services to navigate court-based assistance but that too eventually led to a dead end based on eligibility. He kept looking up legal referrals and Glory continued to use any resource John provided to help her.

Thankfully, John’s tenacity paid off, and Glory eventually worked with Greater Chicago Legal Clinic to reach a settlement with her property manager, where she would pay a lump sum along with a little extra on her monthly rent. When she finally became current on her rent and shared the good news with John, she thanked him wholeheartedly, and said, “Since all of this trouble began, I’ve met different people that said they would try and help, but you are the only one that stuck with me through everything.”

Glory managed to get an extra shift at her job to meet the payments and is still working with John to make sure she is following the court order and managing her household budget. After fighting an uphill battle for two years together, they fondly refer to each other as a “good neighbor.”

If you or someone you know is in need of financial counseling assistance, you can learn more and schedule a free screening here.

When it comes to saving your money, credit union share certificates offer many benefits. But what is a share certificate, and how does it compare to a certificate of deposit (CD)?

Read on to learn more.

What Is a Credit Union Share Certificate?

A share certificate is a type of deposit account provided by credit unions. Credit unions use the word “share” to reflect a member’s ownership in the credit union. Share certificates often have a higher interest rate than a regular savings account.

When you open a share certificate, you agree to leave your funds in the account for a fixed period. For example, you can open share certificates for 13-month and 18-month terms, in addition to other options. However, if you withdraw your funds before the certificate term ends, you may be penalized.

What Is the Difference Between a Share Certificate and a CD?

While share certificates and CDs are both fixed-term deposit accounts with higher interest rates, there are a few differences between the two. Most of the difference is in the terminology used. Because credit unions are member-owned, not-for-profit financial institutions, they offer “shares” to their members and pay them dividends. Banks, which are for-profit financial institutions, offer CDs instead of share certificates. Banks pay CD holders interest instead of dividends. 

Another difference between share certificates and CDs is who insures them. For most credit unions, deposits up to $250,000 are insured by the National Credit Union Administration (NCUA). At banks, deposits up to $250,000 are insured by the Federal Deposit Insurance Corporation (FDIC). Both the NCUA and the FDIC are backed by the full faith and credit of the US government.

Benefits of a Credit Union Share Certificate

If you’re weighing your options across different savings accounts, credit union share certificates offer several unique benefits. Because credit union share certificates often offer higher interest rates than savings accounts, you can take advantage of high dividends without the risks of the stock market. Many credit unions offer share certificates at different term lengths, so you can choose one that fits your savings goals. Once your certificate matures, you have the option to reinvest your funds into another certificate so you can continue earning dividends.

Credit Union Share Certificates: Key Things to Know

A share certificate is a type of savings account offered by credit unions. Share certificates are a fixed-term deposit account that often offer higher rates than a regular savings account. Credit union share certificates pay dividends to their account holders, while CDs pay interest. Credit unions offer share certificates at a variety of term lengths, allowing you to select one that aligns with your savings goals. 

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our educational resources and outreach efforts, we also give back to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening a share certificate today.

The information in this post is for educational and informational purposes only and does not constitute investment advice. You should consult a licensed financial advisor before investing in any financial product or service.

If you’re considering opening a savings account, taking out a loan, or applying for a credit card, it’s important to understand certain financial terms. APR and APY are two terms that are often confused. Even though both APR and APY are ways of calculating interest, they apply to different things.

Keep reading to understand the differences between APR and APY.

APR and APY: What You Need to Know

APR stands for annual percentage rate. APR reflects the cost you pay each year to borrow money (including fees) expressed as a percentage. This rate refers to the amount of interest you’ll pay on loans or credit card balances.

When you take out a loan, you typically have to pay back the original amount plus interest. Your interest rate will vary depending on the type of loan you choose and your specific financial situation, including the length of the loan and your credit score, among other factors.

APR is your yearly interest rate, inclusive of any costs or fees linked to your loan. Evaluating APRs from various loans or lenders can help you find the most suitable financial option for you. For credit cards, you can avoid paying interest and fees on purchases if you pay your balance in full and on time each month.

Some credit cards offer an introductory 0% APR on balance transfers from existing cards. This can help you avoid paying interest if you know you’ll have the funds available to pay the balance down the road. Just make sure to pay the balance in full before the intro period ends to avoid paying interest on your balance transfer.

APY stands for annual percentage yield. APY is the amount of interest earned in savings accounts or other investments yearly, rather than interest paid on a loan. The higher the APY, the more interest you’ll earn on your money. APY includes compound interest while APR does not.

In simple terms, compound interest is interest you earn on top of interest as your balance grows. With compound interest, you earn money on both the initial deposit and the interest that accumulates over time. If you’re looking to save or invest, you’ll want to compare the APY and consider how often the product’s interest compounds.

APR and APY: Key Takeaways

You’ll want to aim for the lowest APR on loans to save on interest payments. Also, remember to pay your credit card balance in full and on time each month to avoid interest and fees. Having the highest possible APY will help you maximize your savings. 

As a not-for-profit credit union, GLCU promotes the financial well-being of our members. In addition to our many educational resources and outreach efforts, we also give back our profits to our members in the form of reduced or eliminated fees, higher savings rates, and lower interest rates on loans. Check out our rates and consider opening an account today.

A new year brings a new start, making it the perfect time to rethink your financial plan or create one from scratch. No matter where you may be in the financial planning process, there are simple steps you can take to create a brighter financial future for yourself.

What Are the Steps Involved in the Financial Planning Process?

Setting realistic financial goals can help you get started on the financial planning process. Consider where you are financially, and where you’d like to be. Meeting your financial goals is a journey, and your financial plan is the roadmap you’ll use to get to where you want to go.

Here’s how you can build a comprehensive financial plan that will help you meet your goals:

• Create a budget. You can craft your budget by determining how much money you have coming in and how much you have going out. List all your sources of income, and what you spend each month on various expenses.

This will help you get a better picture of where you need to adjust your spending to meet your goals. For example, if you’re spending more money than you’re bringing in, consider making some cuts.

• Make lists. When you go shopping, make a list of what you need to buy and stick to it. Consider your monthly budget, and as you add things to your cart, keep track of how much each item costs. That way, you won’t overspend when buying groceries or other essential items.
• Plan for the short- and long-term. Think about what you’d like to achieve within the next year and in the future. Saving for short-term expenses such as a vacation, a new laptop, or gifts for friends and family is generally achievable within a year.

Long-term expenses such as paying for college tuition, purchasing a new car, saving for retirement, or buying a home will require saving for more than a year, so take that into consideration when planning how much you need to save. It’s a good idea to set aside some money for emergencies, too.

• Take advantage of compound interest. One of the best ways to grow your savings is through compound interest earned in a savings account. When you put money into a savings account, it earns interest. That interest is added to your savings balance. Then, your total balance will continue to earn interest, which will increase your savings exponentially over time.

Financial Planning for Retirement

You can start planning for retirement at any age; it’s never too late or too early to set your goals. As you think about your goals, consider how much money you’ll need to retire comfortably.

Here are a few ways you can create your financial plan for retirement:

• Participate in your employer’s 401(k) plan. A 401(k) plan is a great way to grow your retirement savings, especially if your employer’s plan matches your contributions. A 401(k) plan allows you to contribute a percentage of your pre-tax salary to a tax-deferred investment account.

You can maximize your 401(k) plan by contributing the amount your employer will match, and increasing your contributions as your salary grows. However, it’s important to consider your 401(k) plan’s contribution limits, as well as the penalties for withdrawing funds early.

• Open an individual retirement account (IRA). An IRA is another option to help you save for retirement. An IRA is an investment account you can use to grow your savings. There are four types of IRAs: traditional, Roth, SIMPLE, and SEP. All four types of IRAs have tax benefits and contribution limits. To learn more about the differences between the four types of IRAs, read our blog.

Getting on the Path to Financial Success

Achieving your financial goals is a marathon, not a sprint. It takes time and patience to create a financial plan that suits you and your lifestyle.

Taking advantage of the various retirement planning accounts available to you will help you navigate saving for retirement – no matter where you are in your financial journey. Whether your financial goals are large or small, creating a financial plan will set you on the path to success.

At Great Lakes Credit Union, we’re banking for a greater good. We’re dedicated to empowering our members through financial education, community giveback efforts, innovative products and services, and competitive interest rates. Learn more about our financial education events.

If you or someone you know needs help creating a financial plan, contact us.

This blog was adapted from one of our “Great to Know!” videos. You can check out other videos in the series on our YouTube channel.

Going to college is an exciting time in any student’s life, but figuring out how to pay for college costs can be daunting. Fortunately, there are many planning resources available to help you start your college career on the right financial foot.

Read on to learn how to pay for college, and how to budget for college expenses.

How to Evaluate the Cost of College

College costs include more than just tuition. You also must consider the cost of books, supplies, room and board fees, meal plans, club fees, transportation, and any technology you’ll need for class such as a laptop or tablet. Compare the costs of specific colleges by visiting the College Scorecard website provided by the U.S. Department of Education.

You should also budget for emergency expenses. What if your car breaks down? How would you pay for an unexpected hospital bill? These are just a few costs to keep in mind.

Financial Planning for College Students

Once you’ve determined your college-related costs, start creating your college financial plan. Here are three key steps to take when developing your plan:

• Identify your goals and values. Consider what you’d like to achieve and what is most important to you. For example, if participating in a fraternity or sorority is a priority, then you’ll have to set aside money for dues and fees you may be charged. Additionally, if you’d like to live off-campus, weigh the cost against the on-campus housing options available to you.
• Assess your financial situation. What’s financially important to you today may change tomorrow. It’s important to keep an eye on your spending and assess your budget to accomplish your goals.
• Make adjustments. Your college spending plan should be a “live document.” This means that you should regularly review your budget and adjust it as your expenses change.

Budgeting Tips for College Students

Creating a college financial plan and tracking your income and expenses will set you up for success. Here’s how you can create a budget:

• Keep track of your cashflow. Look at how much money you have coming in per month, and how much money is going out. This will help determine if you need to adjust your spending plan.

• Document your expenses. Write down your expenses. Keep in mind that there are four different types of expenses, including:
  • Regular-fixed: These are recurring expenses that don’t change month-to-month. Examples include rent and car payments.
  • Regular-variable: These are recurring expenses that change month-to-month. These costs include certain utility bills (gas and electric, for example), gas for your car, and your phone bill.
  • Irregular-expected: These are infrequent fixed expenses. Examples include tuition and certain fees.
  • Irregular-unexpected: These are infrequent variable expenses. Examples include bills for emergency medical treatment and car repairs.
• Collect bills and receipts to track your expected expenses. Keep receipts when you pay your bills each month. That way, you’ll know exactly how much each bill costs and you won’t have to guess the amount.
  
• Estimate the expenses you’re unable to track. Set aside money each month to cover unexpected expenses. A good budgeting rule is to save 20% of your monthly income.
  
• Consider your habits and attitude. Examine how you spend your money, and how you feel about your monthly budget. Does your budget help you reach your goals, or is your spending holding you back?

What Is Financial Aid?

Financial aid is money you receive to pay for college. You can apply for financial aid to pay for costs not covered by either yourself or your family. Financial aid includes grants, scholarships, work study, and student loans.

Gift aid such as scholarships and grants are funds you can receive to pay for school that you don’t have to repay. Self-help aid such as student loans are funds you must repay.

You can get financial aid from a variety of sources, including:

• The federal government. Filling out the Free Application for Federal Student Aid (FAFSA) is the first step to apply for aid from the government. This includes federal student loans and the Pell Grant.
  
• Your state government. The FAFSA also allows you to apply for aid from your state government. In Illinois, this includes the MAP Grant.
• Institutions. Colleges you apply to may award scholarships or grants to fund your education.
• Outside sources. Institutions and organizations outside of your college can help fund your education through scholarships or grants.
• Private sources. You can also receive financial aid from private sources, including credit union student loans and loans from other financial institutions.

Before taking out any student loans, make sure you understand where the loan is coming from, the interest rate, whether the loan is subsidized or unsubsidized, the repayment options, and the grace period.

Meeting Your Financial and Educational Goals

While the cost of college can be intimidating, there are financing options to help make your college dreams a reality. Whether it’s through scholarships, federal financial aid, or private student loans, making informed financial decisions is a key step in achieving your educational goals. And with a college financial plan and budget in hand, you’ll be setting yourself up for success in the long run.

As a not-for-profit credit union, GLCU empowers its members through community giveback programs, financial education, volunteerism, and competitive interest rates. Learn more about our scholarships and student loans, and check out our college resource center.

This blog was adapted from a webinar hosted by the GLCU Foundation for Financial Empowerment and the Illinois Student Assistance Commission (ISAC). Check out the full webinar to learn more about this topic.

If you or someone you know needs help with college financial planning, contact us.

Expenses can add up fast during the holiday season. In fact, according to a recent survey by the National Retail Federation, consumers plan to spend an average of $875 on food, decorations, gifts, and related holiday items this year.*

To make sure you don’t get in debt in the new year, consider following these five holiday budgeting tips.  

1. Set a Spending Limit

Figure out how much you can realistically spend on everything and make a list. Then, break it down for each category, such as presents, decorations, food, holiday baking, and greeting cards. Assign a dollar amount for each group.

2. Make a Budget for Each Person and Stick to It

For most people, gift-giving is the biggest category in their holiday budget, and it’s easy get off track. Before doing any holiday shopping, plan what you’re going to buy for each person on your list. Decide on a monetary limit for each person and stick to it.

If money is a bit tight this year, consider discussing your budget with family and friends. You can draw names and share gift-buying duties with others so you don’t spread your budget so thin. Buying gifts with others such as parents and siblings can also help your budget go further.

3. Don’t Underestimate the Power of Homemade Gifts

Heartfelt gifts don’t have to be expensive. Your friends and family will enjoy a scarf you made in their favorite color, or the photo you framed from last summer. These gifts demonstrate the thought you put into creating something meaningful just for them.

4. Organize Group Volunteering Events

When you add everything up that goes into hosting the perfect party, costs can get out of control fast. Even if you do a potluck, purchasing ingredients for holiday dishes can take a toll on your wallet.

This year, suggest a get-together that gives back. Meet your friends and volunteer for an organization such as Cool Ministries Food Bank, Habitat for Humanity, Bernie’s Book Bank or other local charities. These outings are fun and can make you feel good, too.

5. Track Your Spending

Keeping track of what you’re spending as you go helps keep you within your budget. You won’t be as tempted to make impulse purchases, and you’ll feel more in control of your finances.

If you overspend this year, make a New Year’s resolution to get a fresh start in 2024 by opening up a GLCU Holiday Savings Account. It only takes $1 to open an account, and you can save money little by little all year long.

A Holiday Budget Is the Gift that Keeps on Giving

Remember: The holidays should be a joyous and happy time spent with family and friends. What people will remember is the time you enjoyed together, not the gifts you gave them. So, try not to feel pressured to overspend, and focus on what’s important. That way, you can welcome 2024 feeling merry and bright and not overwhelmed by debt.

*National Retail Federation, 2023 Holiday Spending to Reach Record Spending Levels, November 2, 2023.

A checking account and a savings account serve two different, but complementary, roles in managing your personal finances. A checking account is primarily used for daily transactions, allowing you to deposit money and make frequent withdrawals. These accounts are typically used for paying bills, making purchases, and managing everyday expenses, and are sometimes interest bearing. They are designed for ease of access to your funds, often providing check-writing privileges, debit cards, and online banking services for quick transfers and payments.

A savings account is intended for money you plan to grow over time. These accounts sometimes limit the number of transactions you can make each month, but they offer the advantage of accruing interest on your balance. This makes a savings account ideal for setting aside funds for future needs or emergencies. They serve as a tool to facilitate saving habits, allowing you to accumulate wealth gradually while providing a safety net for unforeseen expenses. It’s common to direct deposit into savings accounts, establishing a systematic saving routine. Not sure what’s right for you? Read on to learn more

Key Takeaways

• Checking and Savings Accounts Serve Different Purposes: Checking accounts are designed for frequent transactions, making them ideal for managing everyday expenses. Savings accounts, on the other hand, are intended for long-term storage of funds and usually offer interest, making them suitable for building an emergency fund or saving for future goals.
• Choosing the Right Account Depends on Your Needs: When selecting a checking or savings account, consider factors such as fees, interest rates, access to your funds, and the benefits offered by the financial institution. The right choice depends on your financial habits and goals.
• Banks and Credit Unions Offer Different Types of Checking and Savings Accounts: Traditional checking and savings accounts are not the only options. There are alternatives like online checking accounts, high-yield savings accounts, and money market accounts (MMAs) that might offer better interest rates or lower fees.
• Having Both a Checking and Savings Account Can Enhance Your Financial Flexibility: Maintaining both a checking and savings account allows you to separate everyday spending from savings, making money management easier. Moreover, if your bank or credit union is federally insured, your deposits are generally protected up to $250,000.

What is a Checking Account?

A checking account is a type of financial account that allows for numerous withdrawals and unlimited deposits. Unlike other types of accounts, it enables frequent transactions, including deposit demand via checks, debit card purchases, and direct transfers. A key characteristic of a checking account is its liquidity and accessibility, making it an ideal tool for managing daily financial activities.

Is a Checking Account a Bank Account?

Yes, a checking account is a type of bank or credit union account. It is a service provided by financial institutions like banks and credit unions that allows customers to deposit and withdraw money. Due to its function of facilitating regular transactions, many people use a checking account for their primary banking needs, making it a fundamental component of personal finance.

Benefits of a Checking Account

Checking accounts come with a variety of benefits, including:

1. Ease of Access: A checking account provides easy access to your funds, making it an ideal tool for everyday use. You can withdraw money at ATMs, write checks, make debit card purchases, and transfer funds online.
2. Direct Deposit: Most checking accounts allow you to set up direct deposit for paychecks, pensions, or government benefits. This feature not only gives you faster access to your funds but also saves time and the inconvenience of manual deposits.
3. Bill Payment: Checking accounts typically offer the functionality to pay bills directly, either through checks or online transactions. This can include utilities, mortgage payments, credit card bills, or any other regular expenses.
4. Potential for Interest or Rewards: While not as common, some checking accounts can also earn interest, similar to savings accounts. Others may offer rewards or cash back for certain types of transactions.
5. Overdraft Protection: Some banks offer overdraft protection, where in the event of a transaction that would overdraw your account, funds are automatically transferred from a linked savings account or credit line to cover the difference.

How to Choose a Checking Account

Choosing the right checking account depends on your financial habits and needs. Consider factors such as the minimum balance requirements, fees (such as monthly maintenance or ATM fees), ease of access to your money, and any additional perks offered by the financial institution. Some people may prefer a traditional brick-and-mortar bank or credit union, while others might opt for online banks or credit unions for their checking accounts.

Alternatives to Regular Checking Accounts

Alternatives to regular checking accounts include high-yield checking accounts, which often offer lower fees and higher interest/dividend rates; money market accounts, which can also offer higher interest rates but may require a higher minimum balance; and prepaid debit cards, which work like a checking account but without the need for a bank.

What is a Savings Account?

A savings account is a type of interest-bearing account offered by banks and credit unions. Unlike checking accounts, savings accounts are intended to hold the money you don’t intend to use for daily expenses. They often limit the number of transactions you can make each month but offer the advantage of accruing interest over time.

Benefits of a Savings Account

Savings accounts offer several key advantages, including:

1. Interest Earnings: One of the main benefits of a savings account is its ability to earn interest. Your money will grow over time, helping you build wealth.
2. Financial Security: A savings account is a safe place to store your money. Banks and credit unions are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA), respectively, so your money is protected up to $250,000.
3. Direct Deposit: You can set up direct deposit into a savings account for automatic savings. This is especially helpful for individuals who struggle to save money regularly.
4. Emergency Fund: A savings account is a perfect place to keep an emergency fund. It separates these funds from your daily spending money and allows you to have quick access to funds in case of unexpected expenses.
5. Savings Goals: Savings accounts can help you reach your financial goals, whether it’s saving for a vacation, a new car, or a down payment on a house. By keeping this money separate from your checking account, it’s easier to manage and track your progress.

Can You Deposit Checks into a Savings Account?

Yes, you can deposit checks into a savings account. Most banks and credit unions allow for this. You can do this either in person, via an ATM, or through a mobile banking app if your bank offers mobile check deposit.

How to Choose a Savings Account

Choosing a savings account depends on factors such as the interest rate, minimum balance requirements, fees, and how you plan to use the account. Look for an account with a competitive interest rate and low fees. Consider online savings accounts or money market accounts (MMAs), as they often offer higher interest rates compared to traditional savings accounts.

Alternatives to Regular Savings Accounts

Alternatives to regular savings accounts include high-yield savings accounts, which offer higher interest rates; Certificates of Deposit (CDs), which also have higher interest rates but limit access to your funds for a certain period; and MMAs, which usually have higher minimum balance requirements but offer both check-writing privileges and higher interest rates.

Benefits of Having a Checking and Savings Account

Having both a checking and savings account provides financial flexibility. Your checking account can cover everyday transactions while your savings account builds interest and serves as an emergency fund or future investment. This strategy can also help manage your money, separating daily spending from savings.

Are Interest Rates Fixed on Savings and Checking Accounts?

Interest rates on checking and savings accounts are typically variable, not fixed. They can fluctuate based on economic conditions and changes in the Federal Reserve’s interest rate policies.

Will I Lose My Money in a Checking or Savings Account if My Bank or Credit Union Fails?

If your bank or credit union is federally insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Share Insurance Fund (NCUSIF), your deposits are generally protected up to $250,000, minimizing the risk of losing your money.

Should My Checking and Savings Account be at the Same Bank or Credit Union?

There’s no one-size-fits-all answer to this question. Having both accounts at the same institution can make transfers between accounts faster and easier. However, you might find that different institutions offer better rates or benefits for different types of accounts. It’s essential to shop around and choose what’s best for your needs.

How to Choose What’s Best for You

When it comes to checking vs savings accounts, the choice depends on your financial goals and habits. A checking account might be best for managing everyday expenses, while a savings account is better for building an emergency fund or saving for future goals. Remember to consider the fees, interest rates, access to your money, and the reliability of the financial institution. And always feel comfortable to ask for advice from financial advisors or banking professionals to help guide your decision.