Penny Wise: Save before spending

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By Katherine Garcia

Before concentrating on saving money with a certificate of deposit, bonds or a trust, college students must know how much money they have spent from checking accounts.

“A lot of members don’t look at pending transactions,” said Aaron Martinez, customer service representative for River City Federal Credit Union.

He said it’s important to check your ledger, which keeps a permanent summary of all amounts taken and deposited into the account. They can be found on the bottom of a bank statement for those with a debit or credit card or by looking up an online bank statement. “It’s about making sure they keep track of their transactions,” he said. “Some people think a credit card is more like a debit card.”

There are multiple ways to save money and keep track of spending.

A certificate of deposit is an account in which you deposit a certain amount of money and don’t touch it for a specified period of time. At River City Federal Credit Union, a one-year term with a balance of $1,000-$99,999.99 earns 0.45 percent per year and a balance with $100,000 or above earns 0.50 percent. The longer the term is, the more interest is earned.

Funds in CDs receive more interest than in a savings account because the bank can use that principle until the due date. There is a penalty for taking out the money before the specified time frame.

Banks commonly offer CDs of one, two and three years. CD rates have been historically low for the past few years, but they offer more interest than a savings account.

For example, a River City Federal Credit Union CD of $2,000 with a 0.75 percent interest rate and a term of 24 months will earn $30.22 interest. Although it may not seem like much, the CD earns more than a regular 0.15 percent per month interest on savings.

Full-time students enrolled in a community college can open a two-year CD before they start classes, and the bond will mature about the time they graduate. The money can either be kept in the same account for another term or it can be moved to a different CD.

Bonds are another option. Up to $250,000 is insured in a CD, but bonds are uninsured and yield a higher interest rate because of that.

The River City Federal Credit Union is at 610 Augusta St. Call 210-225-6866.


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