Individual Development Accounts at Credit Unions

by NerdWallet

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Individual development accounts, also called matched savings accounts, are special savings accounts that help low-income individuals and families reach particular financial goals, like paying for a home, paying off student loans, or starting or expanding a small business. They are often called matched savings accounts because the sponsoring program will match how much you save at a 1:1 ratio or higher. So, if you save $1,000 dollars at a 1:1 match, the program will match your savings with an additional $1,000, for a total of $2,000 for your use.

Why Join an IDA Program?

IDA programs are designed not just for people with low incomes, but also people who are “unbanked” (meaning they do not have any bank accounts) or “underbanked” (limited bank usage). Unbanked and underbanked consumers often fall prey to payday loan schemes and other non-bank transactions that can further contribute to their debt. IDAs are a low-risk, high-return option to help you get back on track to improve your credit and financial profile.

IDA Requirements

IDA account holders are usually required to deposit a certain amount each month, and accounts are monitored frequently to prevent early withdrawal. Many programs require enrollment in financial education classes to help improve your banking literacy. The money saved must be used for the purpose outlined at the start of the program, and sponsors will be strict about making sure funds go towards the intended goal.

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