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It's never too early to start saving
A tax-advantaged savings account that help families pay for qualified education expenses.
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What are Coverdell Educational Savings Accounts?

A Coverdell education savings account (Coverdell ESA) is a trust or custodial account set up in the United States solely for paying qualified education expenses for the designated beneficiary of the account. This benefit applies not only to qualified higher education expenses, but also to qualified elementary and secondary education expenses.


Anyone can contribute1

Parents, guardians, grandparents, relatives and friends can all add to the account.

Funds grow tax-free

Once funds are in the account, the money grows faster because it grows tax-free.

No tax on distributions

Beneficiaries receive tax-free distributions to pay qualified education expenses.

Why Affinity is a smarter place to save for education

Because we’re a not-for-profit cooperative, we return our profits back to members with better rates and lower than you’ll generally find at other financial institutions. Because we offer better rates and lower fees, we can help you earn more on your money and more toward future education expenses.


Coverdell ESA Accumulator Savings
Works like a regular savings account with added tax-saving benefits.
  • Low, $50 minimum deposit requirement
  • Competitive rates with low risk
  • When balance hits $500, funds can be transferred to a certificate account for greater returns
Coverdell ESA Certificate Accounts
Certificate accounts give you a guaranteed rate of growth with great flexibility.
  • $500 minimum deposit requirement
  • Must be opened with ESA funds
  • Term restrictions apply2—funds must rollover to an ESA account after maturity


Join Affinity!
Our savings accounts, debit cards, and other services are for members only. Joining is easy: Join online or call us at 800.325.0808.
Apply To Open a Coverdell ESA
Once you choose a Coverdell ESA Accumulator or Certificate account, you'll just need a few documents to start your application—click here to view all details.
Fund Your Account
Our Coverdell Certificate accounts require a $500 minimum opening deposit; but if you want to start with a smaller sum, open a Coverdell ESA Accumulator account, which just has a $50 opening deposit minimum. Once the balance reaches $500, you can transfer funds to a Coverdell ESA certificate account for a higher rate of return.


General questions
What is the difference between interest rate and APY (Annual Percentage Yield)?

APR, which stands for Annual Percentage Rate, is the interest rate on an account plus any fees you'll have to pay. It's calculated on a yearly basis and shown as a percentage. APY, which stands for Annual Percentage Yield, is the rate you can earn on an account over a year, and it includes compound interest.

What are dividends?

Credit unions are member-owned and not-for-profit, so any extra funds are returned to members in the form of dividends, reduced loan interest and products and services designed to enhance your financial wellbeing. At Affinity, certain accounts like MoreSavings earn dividends as a reward for keeping your money in the account.

Affinity Coverdell ESA questions
How does a Coverdell Education Savings Account work?

A Coverdell account is a tax-advantaged savings account to help you pay for education costs. It is opened in a child's name to help pay for their qualified educational expenses:

  • Anyone can contribute to the account—parents, relatives, even family friends.
  • Funds in the account grow tax-free.
  • Withdrawals are also tax-free, as long as they are used for qualified education expenses.

Funds can be used to pay for qualified K-12 or secondary education expenses, but there are a few restrictions: There's a yearly $2,000 yearly limit for contributions from all sources, which can only be made until the child is age 18. Funds must be used by age 30 or transferred to an ESA for another child in the family. There are also income restrictions: Coverdell contributions phase out for joint filers with incomes between $190,000 and $220,000. For single filers, the adjusted gross income phase-out range is $95,000 to $110,000.

What is the difference between a 529 plan and a Coverdell ESA?

529 plans are state-sponsored, so rules and contribution limits vary depending on your state. The tax benefits are similar, but some states also provide 529 plan incentives, such as matching contributions for low-income families. However, generally speaking, the contribution limits are higher for a 529 plan than for a Coverdell Education Savings Account (ESA), and there are no age limits for when contributions can be made or distributions taken. 529 plans and Coverdell accounts also define qualified expenses somewhat differently. For example, 529 plans place greater limits on how funds can be used for the K-12 educational expenses of a designated beneficiary.

What is the income limit for a Coverdell?

Anyone can contribute up to the $2,000 annual limit of a Coverdell account, as long as their income level doesn't exceed a certain threshold. Contributions phase out for joint filers with incomes between $190,000 and $220,000. For single filers, the income limits range from $95,000 to $110,000.

What expenses can a Coverdell be used for?

Coverdell account funds must be used to pay for qualified K-12 or college expenses at an accredited educational institution, including tuition, books, supplies, and in some situations, room and board. For K-12 students, funds may be used for such expenses as tutoring, computer technology and equipment, and Internet service. However, if funds are not used for a qualified purpose, they are subject to income tax and an additional 10% penalty.

Can I have direct deposit with a Coverdell savings account?

No, but you can set up automatic transfers into the account.

Does Affinity charge a monthly maintenance fee for Coverdell ESA accounts?

Like our other savings account options, Coverdell accounts have $0 monthly maintenance fees with eStatements. If not, there is a monthly fee of $2 for paper statements.

Are there minimum account requirements for Coverdell accounts savings?

Yes. Our Coverdell ESA Accumulator account has a $50 minimum opening deposit requirement, so you can start saving with even a modest sum. Once your savings grow, you can transfer funds to a Coverdell Certificate account, which has a $500 minimum opening deposit requirement and offers a higher rate of return.

How do I open an Affinity Coverdell account?

It's easy. You have to join Affinity Federal Credit Union as a member first, then apply for one of our Coverdell savings accounts.

Join Affinity Federal Credit Union
How do I join Affinity?

Almost anyone can be eligible for membership! We have relationships with over 2,000 businesses, associations and clubs, and you can join Affinity through your association with one of them.

If you are not eligible through one of these paths, you have the option to join by making a one-time $5 donation to the Affinity Foundation whose vision is to end the cycle of poverty for those we serve.

What is the fee to join?

With Affinity you are more than a member, you are part owner. Affinity is owned and controlled by members who use its services.

This ownership happens when you establish your $5 membership account, which gives you one par value share in Affinity. This is not a transactional account, and these funds will not earn dividends. The account must remain open and funded with the $5 during your membership with Affinity.

Where is the closest branch location?

Our digital tools, such as the Affinity Mobile Banking App and Online Banking, make it easy to manage your account and deposit checks right from your phone. You can also view our branches, shared branching locations and ATMs by visiting Affinity locations.

What is the difference between a credit union and a bank?

Credit unions, unlike banks, are based on a cooperative or "co-op" model in which the members are also the owners. This is the biggest difference between credit unions and banks. While a bank is a for-profit company that distributes profits among shareholders or individual owners, a credit union is a not-for-profit institution "owned" by its members. Therefore, you can think of credit union membership as buying a stake in an organization rather than paying somebody else in exchange for services. Learn more.