Saving money is a priority for many people. Whether your financial goal is to create an emergency fund, save for a down payment on a house or invest for a comfortable retirement, it’s essential to make room in your budget to save whatever you can. An important part of any savings goal is choosing the right savings account.
Here at Addition Financial, we offer an array of savings accounts to suit every member’s needs. Opening a high yield savings account or HYSA can help you earn money on your balances. When our members talk to us about opening a HYSA, they often ask us about the differences between our Growth Plus Money Market account and our Savings Plus account. Here’s the information you need to choose the account that’s right for you.
How Do High-Yield Savings Accounts Work?
High-yield savings accounts offer some benefits that classic checking accounts don’t. Since Addition Financial is a credit union, our high-yield accounts earn dividends instead of interest. In many ways, our accounts are comparable to an interest-bearing account at a bank. Dividends compound daily and are credited to your account monthly.
Most savings accounts pay interest or dividends. If you opt for a HYSA, you’ll earn a dividend or interest rate that’s significantly higher than what you’d earn with a traditional savings account.
Both our Growth Plus Money Market account and our Savings Plus account offer a generous Annual Percentage Yield or APY. We’ll get into the details in the next section, but with both accounts you can reap the benefits of a high-yield savings account.
What Are the Key Differences Between a Growth Plus Money Market Account and a Savings Plus Account?
There are some important differences between a Growth Plus Money Market account and a Savings Plus account.
Checking Privileges
The first major difference between the Growth Plus Money Market account and the Savings Plus account is that the former comes with limited checking privileges. A money market account is primarily a savings account, but our money market accounts come with a free debit card and checks. You can have up to six transactions of the following types each month: checks, debit card purchases, ACH transfers, overdraft protection transfers or transactions by phone with an Addition Financial team member. You’ll have unlimited online and mobile banking and unlimited ATM transactions.
Minimum Balance to Earn Dividends
Both the Savings Plus account and the Growth Plus Money Market account require minimum balances in order to earn dividends. Here’s how they break down.
With the Savings Plus account, you can earn dividends on any balance of $50 and above. In fact, you’ll earn a higher dividend rate on lower balances than you would if you opted for a money market account.
The Growth Plus Money Market account pays dividends on balances of $1,000 and above. Dividend payments are tiered and you can earn more if you increase your balance.
Dividend Rates
Another key difference between these two accounts is in the dividend rates you can earn and the way rates are structured.
Let’s start with Savings Plus. The Savings Plus account is designed to help people with little to no savings grow their savings with dividends. What that means is that on balances between $50 and $5,000, you’ll earn a generous dividend rate. As of January 2024, the dividend rate is 3.92% annually for an APY of 4.0%. When your balance goes above $5,000, you’ll earn the same dividend rate as the standard Share Savings account—at which point it may be advantageous to move your savings into a money market account.
If you open a Growth Plus Money Market account, you’ll earn dividends provided you maintain a balance of $1,000 or more, at the same rate as the Share Savings account. Once your balance reaches $10,000, your annual dividend rate will increase substantially to 2.5%, and increase again at $100,000, $250,000 and $1,000,000.
No Minimum Deposit or Minimum Balance Requirements
Both of the accounts we’re comparing come with no minimum deposit requirement and no minimum balance requirement. There’s some strategy involved with making initial deposits.
If you choose a Savings Plus account, making an initial deposit of $50 means that you’ll be earning dividends from the date of your deposit. There’s nothing wrong with starting with a lower initial deposit, but depositing $50 will allow you to maximize your earnings.
With a Growth Plus Money Market account, you’ll get the most benefits by starting with a deposit of $1,000 or more. Here again, this amount means that you’ll be earning dividends immediately instead of waiting for your balance to reach the necessary threshold.
What Should I Consider When Opening One of These Accounts?
Choosing between a Savings Plus account and a Growth Plus Money Market account involves putting some thought into your financial circumstances and goals and asking yourself these key questions:
- What are my financial goals? For example, you might be saving for a down payment on a house, building an emergency fund or trying to jump-start your retirement savings.
- How much money do I have to use as an initial deposit? As we mentioned above, if you’ve got less than $1,000, you may want to start with a Savings Plus account to begin earning dividends as soon as possible. If you’ve got more than $10,000, then you should start with a Growth Plus Money Market account to maximize your earnings.
- How do I want to access my money? If you’re looking for a straightforward savings option, you may not care if you have checking privileges for your savings account. One of the benefits of a money market account is that you can write a limited number of checks each month, something that’s not possible with the Savings Plus account.
- Can I meet the requirements to qualify for a fee waiver? At Addition Financial, we keep fees low but it’s understandable that you may want to avoid fees entirely. Being able to meet the direct deposit or debit card transaction requirements can save you money every month.
Answering these questions can help you get a handle on which account will best meet your needs and help you choose the one that’s right for you.
What Are the Benefits and Downsides of These Accounts?
Choosing a savings account, whether it’s a money market savings account with checking privileges or our Savings Plus account, comes with benefits and some potential downsides. Here’s our quick overview of each account.
Growth Plus Money Market
Here are the benefits and potential drawbacks of choosing a Growth Plus Money Market account.
Benefits:
- Dividends on all balances of $1,000 or more
- Tiered dividends increase with your balance
- Checking privileges
- Waived monthly fee with $2,000 of direct deposits or 20 debit card transactions per month
- Combines the best of checking and savings accounts
Potential downsides:
- No dividends for balances below $1,000
- Must maintain a high balance to earn the highest dividends
- Limits on debit card and checking transactions
- $15 monthly fee if you can’t qualify for the waivers
Here’s the information you need about the Savings Plus account.
Benefits:
- Dividends on all balances of $50 or higher
- Fee waiver with $1,000 in direct deposits or 10 debit card transactions per month
- High dividends on balances up to $5,000 to grow your savings quickly
- Free debit card
Potential downsides:
- No checking privileges
- Lower dividends on balances of $5,000 or more
- Limits on debit cards transactions and transfers
- $5 monthly fee if you don’t meet the waiver limits
You can compare these benefits and downsides to get a feeling for which account is right for you.
Which Account Should You Choose?
Now that you have the information you need to understand both the Savings Plus account and the Growth Plus Money Market account at Addition Financial, here are some pointers to help you choose an account that will work for you.
If you’re someone who doesn’t have much money saved and you want to prioritize savings, we recommend the Savings Plus account. This account pays high dividends of 4.0% annually to help you grow your savings quickly. You’ll earn that rate on all savings up to $5,000. Once your savings reach that threshold, the rate will drop to the same rate we pay for our Share Savings account.
If you’ve got a significant balance of $5,000 or more and want to put your money into an account where it can grow but still be accessible, then we suggest the Growth Plus Money Market account. With this account, you’ll earn dividends on your balance of $1,000 or more and see a significant increase in your dividend rate once your balance gets to $10,000. You’ll also have checking privileges—something that’s not typical with most savings accounts.
Choose Your Ideal Savings Account Today
Choosing the right savings account can play a significant role in meeting your financial goals. If you’re new to saving, the Savings Plus account can boost your savings and give you the head start you need to meet your goals. The Growth Plus Money Market account has tiered dividends to reward you as your savings grow, and checking privileges for your convenience.
Are you ready to choose your ideal savings account? We’re here to help! Click here to learn about all of our savings accounts at Addition Financial and pick your account today.
