OnPath Credit Union

A high-yield checking account is one of the best ways to safeguard your finances during economic volatility. If you have concerns about inflation, the job market or the value of your other investments, a high-yield checking account may be an effective tool for enhancing your peace of mind.

Make Your Money Work for You With a Dependable High Yield

If you are a member of a credit union that offers high-yield checking and the account possesses the same features and functionality as regular free checking accounts, you will likely benefit from using it. In fact, there’s an “opportunity cost” for not taking advantage of the opportunity.

An opportunity cost is a measure of income or value a person misses out on because they didn’t take advantage of an opportunity, often by putting their time or money into something less productive.

A checking account with $5,000 in it at the start of the year and a seven percent annual yield will be worth $5,350 by the end of the year. In that scenario, there would be an opportunity cost of $350 if a saver has access to a high-yield account but instead keeps their savings in an account with no yield.

The actual value can be slightly higher depending on how frequently the yield is compounded.

Best of all, maximizing the yield on your savings requires little effort. Once the account is set up, your money will work for you.

Hedging Against Inflation

Inflation has been a real problem for many people living in Louisiana. The cost of groceries, housing, fuel, clothes and other goods have gone up significantly over the past few years. Inflation peaked in 2021 at seven percent and 2022 at 6.5 percent. Inflation, like yield, also compounds each year.

For example, a loaf of bread that was $5 at the start of 2021 would have cost $5.35 by the end of the year, and $5.70 by the end of 2022. Unfortunately, the value of your money during that inflationary period would be static if you left it in an account with no yield, meaning your money has less purchasing power than it did prior to that year’s inflation.

Maximizing the yield on money stored in checking or savings accounts can counter inflation. Your purchasing power would remain unchanged after seven percent inflation if you were earning a seven percent yield on the dollars in your checking account.

The rate of inflation has thankfully been decreasing over the past two years, meaning an account earning a seven percent yield would not just maintain parity with inflation but outperform it.

A Virtually Risk-Free Way to Save

Many people leverage high-interest checking and savings products to put money aside for emergencies and future purchases. Unlike other types of investments, like real estate, stocks or bonds, money saved in federally insured checking accounts, savings accounts and money market accounts is shielded from market-related risks.

All of your savings in a credit union or bank are federally insured up to $250,000 per depositor and ownership category. Even if the bank or credit union fails, which is unlikely if you bank with a trusted financial service provider, the federal government will guarantee you get your money back.

The same can’t be said for investments with values dictated by unpredictable markets. The performance of stocks can fluctuate dramatically, but the dollars you invest in the stock market are not insured or guaranteed. You could potentially lose all or most of your initial investment if a company you invest in fails.  

Always Accessible for Any Situation

Checking accounts offer maximum liquidity for banking customers. You can pull out funds, transfer funds, or use your debit card to make a purchase any time. There are no extra steps or delays required to liquidate the funds and no limitations on the number of times you can access the funds every month. There may be daily limits on how much you can withdraw from an ATM at any one time, but you can go inside a branch and ask a teller for the full value of your checking account at any time if the need ever arose.

If you want an emergency fund that is easy to access, a checking account is the most liquid and reliable option available.

Protect Your Purchasing Power With a High-Yield Checking Account

If you want to put your savings to work, become a member of OnPath Federal Credit Union. Our high-yield rewards checking and savings products provide safe and easy ways to safeguard and grow your money. Call us at 800.749.6193 for more information.