Why a Certificate of Deposit is a Good Idea

Did you know that your savings portfolio should be diversified just like your investments? Financial experts recommend giving your savings as much chance to grow as possible. Let’s take a look at a particularly great choice for diversifying your savings: a share certificate.

What is a share certificate?

A share certificate (also referred to as a certificate of deposit, CD, or savings certificate) is an insured savings account with a fixed dividend rate and a fixed date of maturity. The funds in these accounts will grow at a rate that is usually higher than those on standard savings accounts, and money market accounts.

How is a certificate of deposit different from a savings account?

There are several differences between a share certificate and a savings account, but the main one is accessibility. Whereas a savings account has minimal restrictions on withdrawals, the funds in a certificate can’t be withdrawn without penalty until the maturity date.

What are the advantages of diversifying your savings through a share certificate?

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

  1. Low risk. Each 802 Credit Union certificate is insured by the National Credit Union Administration for up to $250,000. 
  2. Higher dividend rates. Certificates offer all the security of savings accounts, but with higher yields.
  3. Locked-in rates. The APY of your certificate is set when you open it and is locked in until its maturity date.

Terms and conditions of certificates

Certificates come with some basic requirements. These include a minimum opening balance and committing to leaving your money in the account for a set amount of time. As a member of 802 Credit Union, you can open a certificate with as little as $500. See our savings page for current rates.

CD term lengths also vary among financial institutions, with most offering a range from three months to five years. At 802 Credit Union, we offer our members certificates that can be opened for just 6 months, or as long as 5 years. Plus, we sometimes offer special rates outside of these terms.

Is a savings certificate for everyone?

While keeping your savings in a certificate can be an excellent way to diversify your savings, it’s not for everyone. Only go ahead with your decision to open a share certificate if you are certain you will not need to access these funds before the maturity date.

If a certificate sounds like the right choice for you, stop by 802 Credit Union to learn more. Or check to see our rates and any current specials. We’re committed to giving your money its best chance at growth.

Posted in