Credit Union News

Recently, personal finance and investment expert Scott Burns was asked a question in his weekly column about getting the most from investments. R.B. wrote to Scott because his IRA was earning only 96 cents each quarter on an investment of almost $30,000. When you calculate that interest rate, it's less than one tenth of one percent of the investment. The letter ended with the phrase, "Help, I'm 76 years old," and conveyed all the worry and distress of an elderly person hoping to keep their investments and their livelihood intact.

Burns recommended a move to a financial institution offering better rates, specifically referencing credit unions as the best option. He advised R.B. to ladder his investments, placing them in certificates that would mature at six-month intervals so that he would have funds available at all times but would take advantage of higher interest rates on longer term certificates.

While using a credit union is great advice at any time, you may be wondering, "Can a credit union really help in this situation? How much better can a credit union's rates be?"

With R.B.'s current investment, he's making about $4 each year in interest, not even keeping pace with the inflation rate. However, if R.B. were to invest his funds with RBFCU in the manner that Burns suggested, he'd generate a great deal more in interest. How much? Consider the following example.

R.B.'s current investments:

Pricipal Interest Rate Time Interest Generated Total
$27,600 .014% 30 months $9.66 $27,609.66

R.B.'s investments with RBFCU, as based on Scott Burns' laddering advice (based on rates as of Aug. 24, 2010):

Principal Product Interest Rate Time Interest Generated Over 30 Months
$2,600 Money Market 0.60% 30 months $39.28
$5,000 6-month CD 0.85% 6 months $21.29
$5,000 12-month CD 1.15% 12 months $57.80
$5,000 12-month CD, followed by 6-month CD 1.15%, followed by 0.85% 18 months $79.33
$5,000 24-month CD 1.70% 24 months $172.80
$5,000 24-month CD, followed by 6-month CD 1.70%, followed by 0.85% 30 months $194.82
Total Interest generated $565.32
Total $28,165.32

By choosing RBFCU, R.B. would have earned $565.32 in interest during a 30-month period, as opposed to $9.66 with his current financial institution. The additional interest he earned would provide him with some comfort and peace of mind as he maintains his financial security.

Think the concept of laddering sounds complicated? Our Member Services Team can help you discover the financial products that will give you the most for your money. Stop by a branch or contact the Member Service Center today and make your money start working for you!