Saving in a low-yield world
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Top savings rates for members only

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, 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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"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.

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