All You Need To Know About Share Certificates

If the lump under your mattress is getting uncomfortably big and you’re looking for a two women looking at a laptop and bank statementsafer, more lucrative place to park your savings, look no further than Destinations Credit Union. As an institution that’s completely devoted to your financial wellness, we offer several secure options for savings, including Destinations Credit Union Savings Accounts, High Yield Accounts, Holiday Clubs, and Vacation Clubs.

Another excellent option we offer our members to help their savings grow is our share certificates and referred to by banks as CDs. These unique accounts offer the best of both worlds when it comes to your savings. First, you’ll be giving your money a greater chance at growth than it would have in a typical savings account. Secondly, you are not subjecting your savings to the inherent risks and potential for loss that accompanies investing in the stock market.

Let’s take a closer look at the way this fantastic savings product works and why it might be the perfect choice for you.

What is a Certificate?

A share certificate is a federally insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on savings accounts and some money market accounts. Generally, there is no monthly fee to keep the certificate open.

However, unlike a savings account, your money will be tied up in a certificate. A typical certificate will not allow you to add any money to the certificate after you’ve made your initial deposit. You also won’t be able to withdraw your funds before the maturity date without paying a penalty.

Terms and conditions of Certificates

As a member of Destinations Credit Union, you can open up a certificate today. However, there are some basic requirements that must be met before you can do so, including a minimum opening balance and a commitment to keep your money in the account for a set amount of time.

The minimum amount of funds you’ll need to deposit to open a certificate will vary widely from one financial institution to the next and also depends upon the term you choose. Some institutions will accept an initial deposit as low as $50 for a certificate. Others, such as a “jumbo” certificate, will demand an opening balance of $100,000. In general, the more money you invest in a certificate, the higher rate of interest it will earn. At Destinations Credit Union, you can open a certificate with as little as $500 at an Annual Percentage Yield (APY) between 1.40% and 2.25% (as of 9/30/19 – rates are subject to change without notice) .

Certificate term lengths also vary greatly among financial institutions, with most offering a choice of certificates that run from three months to five years. Typically, certificates with longer maturity terms will earn a higher rate. Here at Destinations Credit Union, we offer our members certificates that can be opened for just 6 months or as long as 5 years.

To hear more about our certificate terms and rates, speak to a Destinations Credit Union representative today.

Is a savings certificate for everyone?

While keeping your savings in a certificate can be an excellent option for your money, it is not for everyone. Before you go this route, ask yourself these important questions:

  • Do I have an emergency fund set aside to help me get through unexpected events or circumstances?
  • Do I anticipate needing to access these funds during the life of the certificate?

Remember: Your money will be tied up in the certificate and you will not be able to access it without paying a penalty. A certificate works best for people who have money set aside for a rainy day and are fairly certain they will not need to access the funds in the certificate until its maturity date.

Why keep your money in a certificate?

Here are some of the most popular reasons people choose to open a certificate:

1)     Low risk. While nearly every investment carries some sort of risk, your money is always safe in a certificate. With each Destinations Credit Union certificate insured by the National Credit Union Administration up to $250,000 and independently insured up to $250,000 by Excess Share Insurance, you can rest easy, knowing your money is completely secure.

2)     Higher dividend rates. Certificates offer all the security of savings accounts with higher yields. It’s more for your money, just for choosing to invest it in a certificate.

3)     Locked-in rates. There’s no stressing over fluctuating national interest rates with a certificate. The APY is set when you open the account and is locked in until its maturity date. Instead of playing guessing games, you can determine exactly how much interest your money will earn over the life of the certificate the day you open it.  Plus, with Destinations Credit Union, we offer the opportunity to bump up the rate one time during the term of the certificate if rates rise.

If a certificate sounds like the perfect choice for you, stop by Destinations Credit Union today to learn more. We’re committed to giving your money its best chance at growth.

Your Turn: Have you chosen to keep your savings in a certificate? Tell us why you chose this option in the comments.

SOURCES:
https://www.nerdwallet.com/blog/banking/cd-certificate-of-deposit/

https://www.thebalance.com/cd-basics-how-cds-work-315245
https://www.businessinsider.com/5-things-no-one-knows-about-cds-2012-10

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