Savings Secured Loan

Do you need to make a purchase but don’t want to spend all of your savings? A savings secured loan is perfect for you. It’s a low-interest loan that uses your own money as collateral. Your savings secures the loan so you can borrow the same amount that you have in your account. As a bonus, there’s no credit check so it’s quick and simple.

Illustration of a large gold lock indicating a secured loan option

What is a Savings Secured Loan?

When you need to buy something, think of a Savings Secured Loan before spending the hard-earned money in your savings account. For a quick, low-rate loan, use your savings as collateral! Secured loans require collateral. For example, when you take out an auto loan, the car is used to secure the loan. The car is the collateral. Similarly, your home is considered the collateral when you get a mortgage or home equity loan. With a Savings Secured Loan, the money you already have on deposit is used as collateral.

Illustration of a large percent sign indicating a low rate secured loan

What are the benefits of a Savings Secured Loan?

There are many reasons to choose a Savings Secured Loan. First, the rate is much lower than the average credit card or unsecured personal loan. Historically, credit cards charge much higher interest rates than a secured loan. The average credit card rate 20.93% as of August 2023 according to, according to A Savings Secured Loan rate is as low as 5.50%* APR. Additionally, there is no end date when you use a credit card. You could be paying for that purchase years longer than you would with a Savings Secured Loan, racking up hundreds more in interest charges.

Secondly, you worked hard to build up your savings account. Why spend it all on one purchase? Borrow against it with a Savings Secured Loan. This way, when the loan is paid off with minimal interest charges, you still have your savings. You can borrow against your own money again and again.

Another benefit is that you continue to earn interest on your savings while you pay back the loan. Basically, you’re cutting down the amount of interest you pay since you’re still earning money at the same time. For example, if you borrow $5,000 for 5 years at 5.50%* annual percentage rate (APR), you would pay around $193 in interest. If the $5,000 you’re borrowing against is sitting in a savings certificate with a rate of 3.25% APY, you would earn around $114. As you can see, when you subtract the interest you earned from the interest you paid, it’s only $79. That’s a bargain when you need to borrow money!

Lastly, there is no credit check. Your savings, which is the collateral, is put on hold in your account. That means there is little risk to the credit union. If you default on the loan and don’t make your payments, the credit union can take the money that’s on hold. It’s a quick and easy loan that doesn’t affect your credit.

*Rate shown includes 0.25% automatic payment discount.

Illustration of a man sitting in a chair thinking about money

How much can I borrow?

You can borrow up to the same amount of money you have on deposit. We will give you a loan equal to the amount of money you have in a savings account or savings certificate. You can borrow dollar for dollar against your savings. So, if you need $5,000, we will put that amount on hold and grant you the $5,000 loan. As the loan is paid off in monthly installments, your savings will become available for you to use. Additionally, you can use a Savings Secured Loan over and over. Once the initial loan is paid off, you can use your savings as collateral again for your next purchase. Also, you can add to the loan at any time. If you have the savings available to borrow against, you can get a loan.

Illustration of people putting money in a piggy bank

Why shouldn’t I just spend my savings?

How long did it take you to build up your savings? Was it easy? Did you get a lump sum of money from a tax return or stimulus payment? That doesn’t happen very often. You certainly could use that instead of taking out a loan, but how easy would it be to save that money again? If you don’t opt for a Savings Secured Loan and simply spend your own savings, there is no guarantee you will build the savings back up.

If you’re concerned that your savings won’t be available to use in case of an emergency, there is a solution for that. For example, if you need the money that is securing your loan, we can transfer the balance to a personal loan. This way, your savings will be freed up for you to use. A personal loan is based on credit and does have a higher interest rate. However, it would help you out of an emergency situation if you need cash. While this scenario is rare, we are always here to help you figure out the best solution.

Illustration of a mobile phone displaying a credit score thermometer, indicating a secured loan can help your credit

Can it help me build credit?

Yes! Making your payments on time and the Savings Secured Loan itself can help raise your credit score. We report loan activity to the three credit bureaus once a month. That includes both good and bad credit activity. Making your loan payment timely should help you see your credit score improve. Additionally, a Savings Secured Loan does not require a credit check. Therefore, your credit won’t be negatively affected by a hard pull.

A secured personal loan is also a better choice for building credit or repairing credit. Your monthly payment doesn’t change, and you pay a lower interest rate while your credit improves. A Savings Secured Loan offers a lower, fixed rate than an unsecured personal loan because the loan is secured. It uses the money you have on deposit as collateral. It’s a smart way to improve your credit.

Additionally, parents often use a Savings Secured Loan to help their teens or young adult children build good credit. Typically, older teens and young adult children have no credit. This can be a hurdle when they apply for a credit card on their own someday. Many financial institutions don’t look favorably on someone with no credit. The lender doesn’t know what type of borrower you are if there’s no history to look at. So, if your child needs to purchase something, parents can use their own savings as collateral.

However, we don’t suggest you finance their first car with a Savings Secured Loan. Start with something smaller like a new game console or sports equipment. This can be a great way to teach them about saving, borrowing, and credit in general. This loan can be a great option for teenagers to start building their credit with little risk! It’s never too early to teach your children about money.

Why wouldn’t I just use my savings to pay for what I need?

Why would you take on a loan payment instead of just using the money you already have? Many people don’t have the discipline to save money. It takes some folks a long time to save even $1,000. Living paycheck to paycheck is a common lifestyle these days. Instead of spending all of your savings in one shot, use a Savings Secured Loan. There’s no guarantee you will save up that money again. But with a Savings Secured Loan, you will pay minimal interest and still have your hard-earned savings at the end of the loan.

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When you walk in the door you are always welcomed with a smile and happy greetings. Nothing is ever hard to do. When I need a loan it’s done and ready for me and I don’t even have to do anything! Just come in and sign!

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Eileen – North Arlington, NJ

I remember when I joined the CU in 1980 and you were located in a closet upstairs, and you would write the number of members and the percentage rate on a chalk board on the wall.

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I just wanted to let you know that your staff has been so helpful since the move out of the building. The staff is always quick and kind. You said that a Credit Union is much like a Bank…I would say that the Credit Union is much better than a bank. I appreciate you guys!!

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I just went through one of the most painless processes getting a home improvement loan. I couldn’t believe how quick and smoothly everything went. I was quite impressed at the level of service. A special thank you also goes out to Debbie for her efficiency and for being so easy to work with!

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I love you guys, one call and it’s done. Love, love, love you all.

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I just went through the process of taking out a car loan. If it weren’t for Melissa, I wouldn’t have been able to get things done. I wasn’t sure about what to do for so many things, but Melissa did! She was always there for me, quick, soooooo much help. Lucky for me I was smart enough to join your credit union years ago.

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I’m ready! How do I apply for a Savings Secured Loan?

Great, let’s get you started! Apply for a Money FCU Savings Secured Loan. Want to learn more before applying? Call (315) 671-4000 or chat with our friendly agents. We are ready to answer any of your banking questions.

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