Many organizations and buying clubs offer members special rates on savings vehicles such as CDs. Some groups go even further, offering products such as IRAs, money market accounts and online banking.

But do the special rates justify membership?

It depends on how valuable the club and its financial products are to you, says consultant Eric Solis, founder of Save252.com, a Web site that helps consumers develop saving and investing habits.

“Having a membership in a buying group or co-op can make sense,” Solis says. “A large organization can leverage relationships and buying power, and they have the capacity to use their collective girth to create deals. So members should be able to take advantage.”

However, it’s a mistake to assume a special rate is always the best deal, says Patricia Seaman, director of marketing and communications for the National Endowment for Financial Education, a national nonprofit financial literacy organization based in Greenwood Village, Colo.

Instead, consumers need to perform dollars-and-cents research to find out if a members-only savings product is the way to go, she says.

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Bankrate’s rate-search tools can help you find the best deals on CDs and savings accounts.

“People get starry-eyed at the mention of a high interest rate, but if they take the time to break down the math, they’ll get a much more realistic picture of whether or not a CD is advantageous to them,” she says.

Members only

Groups such as AAA, Costco and the United Services Automobile Association all offer special rates on financial products to their members.

Bill Gerhard, director of financial services for AAA’s national office in Orlando, Fla., says the benefit to opening an account under a club’s membership is that its rates may be higher than a bank’s regular interest rates.

As an example, AAA members receive a 5 basis point interest rate advantage over Discover Bank’s published rates, he says. A basis point is one-hundredth of a percent point. Members-only clubs may also add in other perks, such as no minimum deposit requirements and temporarily waived early withdrawal penalties.

Many consumer finance Web sites (including Bankrate) list top savings rates for CDs and money market accounts across the country. However, it’s hard to find information on members-only organizations that offer exclusive savings rates, Solis says.

Your wallet may be the best place to find a member deal. If you’re a card-carrying member of a warehouse club or automobile club, contact the member benefits department and ask about financial products with above-average savings rates.

If you are not a member of a group that offers these services, ask other people for help. A tip from a friend or even a personal finance blogger could identify an organization that’s not yet on your radar.

Weighing the offer

After finding a members-only offer, you need to weigh pros and cons.

Take the example of investing in a CD with a members-only special rate. Seaman encourages consumers to create a checklist that includes the interest rate along with three other pieces of information: the amount they have to invest, the term of the CD and how frequently interest will be compounded.

“Ideally, you’d like to have a product that offers daily compounding,” she says. “But if that’s not an option, you should know if interest will be compounded monthly, annually, etc.”

Once you know those four variables, put the information into a CD calculator, which can reveal how much money you’ll have at the end of the CD’s term.

“If you’re comparing multiple savings accounts, figure out how much you’re getting with each one, and determine the difference in the amount of money you’ll earn,” Seaman says.

Don’t forget to ask your home bank or credit union about their top rates, too. Many financial institutions offer some of their best deals on interest-bearing accounts to customers who have a mortgage or IRA with the bank.

If comparisons show a members-only product beats your own bank’s best rate, calculate the cost of club membership and other club benefits to determine if it’s worth the higher rate over time, says Seaman.

Chances are that with today’s low interest rates, the difference between a members-only CD and another bank’s savings account is minor, Seaman says. So, you may need to invest a substantial amount of money to receive a pure net financial benefit (after paying the membership fee).

For example, if you have to pay $50 in membership dues per year, you’d need to invest about $100,000 to benefit from a CD’s 5 basis point interest rate advantage over another CD if the interest is compounded daily, Seaman says.

Of course, it’s important to also weigh the other benefits of a club membership when making your decision. For example, AAA members receive perks such as emergency assistance, free travel plans and maps, discounts at different retailers, Gerhard says.

“Ideally, you’d like to have a product that offers daily compounding.”

If the members-only organization’s savings account is the best deal, or you’re already a member, signing up for the product may make sense. In making your decision, also look at other factors to determine the product’s value to you, Seaman says.

“Consider the level of convenience you require,” she says. “Do you prefer to bank online or go to a branch? Look at the minimum and maximum deposit requirements. Do you have the amounts necessary to save?”

Fees and penalties

The withdrawal penalty is another detail to consider. Which fees will you have to pay if you lose your job and need to quickly access to the savings? Are you comfortable with that possibility?

Seaman notes that even these questions can be answered with a simple math equation.

“Let’s say a CD has (a) withdrawal penalty of six months,” she says. “Your CD calculator may reveal that the forfeited penalty amount is only $20. By attaching a dollar amount to the equation, it becomes much easier to visualize if the product is a good fit.”

Additionally, review how the organization handles the CD when it matures. Will the funds roll over automatically into a new term? Or will it require you to take a proactive step to access those funds? Most importantly, which approach do you prefer?

“There’s no right or wrong answer,” she says. “Just make sure you ask yourself that question and can act on your preferred choice.”

Remember, your investigation may reveal that the club’s banking options are not right for you, says Bill Griffith, a Certified Financial Planner in Washington, Pa.

“A savings account is just one place where you can put cash,” he says.

The best use of your money may be to pay off outstanding loans or find more aggressive investments, Griffith says. This is especially true if you carry credit card balances, he adds.

“Anything over what’s needed for reserves can be used to reduce higher interest debt,” he says. “It’s an especially good idea when yields are low on savings accounts.”

If you’re not saving for retirement, your money may also be better spent investing in a longer-term investment strategy, such as a 401(k) or IRA, instead of a members-only CD, Griffith says.

Final steps

If you do decide that the members-only financing deal is your best choice, review your organization’s rules before making any money moves.

There could be a provision that precludes you from getting special rates. For example, only about 40 out of 50 AAA auto clubs participate in its high-yield savings account program, according to Gerhard.

If the members-only association isn’t a bank, it’s important to research who will handle the financial account.

Members-only organizations generally partner with banks, so their savings accounts are FDIC-insured. AAA’s savings vehicles are offered in partnership with Discover Bank. Costco partners with Capital One Direct Banking.

“It’s important to make sure your investments are safe,” says Solis.

Investors should also pay attention to market conditions and how they could affect your portfolio.

“The next ‘gotcha’ could be a sharp increase in inflation,” Solis says.

If that happens, you could experience a decrease in the purchasing power of your investment, and you may have to revisit your savings strategy, he says.

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