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There has been much talk about inflation in recent months – it is stubbornly high and will not go away anytime soon. But how does inflation affect the average Utahn trying to save money?
Simply put, inflation is an increase in the average price of goods and services in the economy. If prices rise, purchasing power falls. Consumers spend more money on exactly the same goods and services. This price increase can be tracked over time and expressed as a percentage increase. According to an article by Penelope Wang for Consumer Reports, inflation recently rose to an annual rate of 8.5 percent – the sharpest increase in almost 40 years.
Aside from making everything more expensive, inflation also has a profound impact on savings. It costs more money to buy almost anything, reducing consumers’ overall ability to save. Grocery prices, for example, are up 11.4% year over year — the biggest 12-month rise since 1979, according to the Bureau of Labor Statistics. Additionally, traditional savings accounts have less earning power in a bloated economy as inflation beats most returns.
So what can the average Utahn do to fight inflation? A credit union helps its members take money matters into their own hands to fight inflation with flexible fixed-term deposit accounts that exceed earnings from ordinary savings.
Save smarter to fight inflation
Utah First Credit Union, a financial institution founded in Utah in 1935, understands the impact of inflation on its members. With less purchasing power and fewer safe places to put savings, Utah First is offering 3% APY on term deposits to help members save a little more and fight inflation.
With this great interest rate, no matter how long members choose to keep their money – just a year or even five years – Utah First hopes to give Utah residents an advantage in a bloated economy and give them risk. Free investing, guaranteed growth and a flexible savings plan in economically uncertain times. Plus, with compound interest, the longer members choose to deposit their savings, the more money they’ll make.
There are many ways to invest, but in a bloated economy, options and earning power are somewhat limited. Some financial experts suggest investing in stocks or bonds to beat the inflation rate over the long term. The theory is that broader stock market indices will rise over the long term, outperforming inflation, according to a Forbes article. But investing in the stock market offers no guarantees, and investors can even lose money in the short term. Additionally, CNBC reports that the stock market recently closed at a new low for 2022, down about 20% year-to-date.
Almost every investment involves some degree of risk, but a time deposit is that rare investment vehicle that is completely risk-free. It is backed by the federal government, giving investors peace of mind with their money for a set term and with a promise of future returns.
The Utah First Term Deposit gives members the opportunity to invest their money for one to five years with guaranteed 3% growth. It’s a safe bet. Depending on the amount deposited, members can calculate to the decimal point how much they will earn at the end of their term.
Flexible savings plan
The Federal Reserve is doing its part to fight inflation by raising interest rates on borrowed money, which has a dampening effect on consumer spending. (Theoretically, if consumers spend less money, the supply of goods and services should increase.) Economically, when supply exceeds demand, prices fall.
Fed action notwithstanding, consumers can stem inflation on their own terms by choosing to save rather than spend. When consumers spend less money on non-essential purchases, they control their own purchasing power and refuse to sacrifice their money to the throes of inflation.
But inflation affects savings and spending alike. By putting money in a time deposit, consumers can outperform ordinary savings accounts, which can devalue their money in a bloated market. With 3% guaranteed growth, Utah First offers members a savings vehicle that more than doubles earnings at the average market rate.
With 3% APR on 1-5 year term deposits, Utah First helps members fight inflation and save money at their own pace. If you’re looking for a flexible, risk-free savings plan with guaranteed growth, contact a Utah First financial expert to see if a time deposit is right for you.