Interest rates are always a hot topic, whether they go up or down. As of this writing, the Federal Reserve has raised interest rates four times in 2023 in its effort to curb inflation. While there’s much debate on whether this is a smart move, there’s little doubt that an increase in interest rates for home and auto loans and credit cards makes it more challenging for consumers. But there is a silver lining: increased interest rates mean increased rates for CDs and Certificates. Before we go deeper, let’s share the one difference between a CD and a Certificate. Banks offer CDs. Credit Unions offer Certificates. They work the same.
There are many smart reasons to include Certificates as part of your financial plan to achieve your goals.
- Peace of mind: Your investment is insured by the National Credit Union Administration (NCUA) up to $250,000.
- Guaranteed returns: The stock and bond market go up and down. Real estate goes up and down. A fixed-rate Certificate is just that, fixed. Your earnings are fixed for the length of the Certificate.
- Portfolio diversity: If you are invested in the stock market, Certificates help add balance to your portfolio. They are a secure counterpoint to riskier investments.
- Choice: Certificate terms vary from just a few months to years. Choose a term that works for your financial plan.
- Better rates: Yes, savings rates give you immediate access to your funds, but they don’t generally offer high yields. As of this writing, the average national savings account rate is only 0.58% APY.* Certificates generally beat these significantly.
- Splurge protection: Out of sight, out of mind. Opening a Certificate keeps your money in a safe place that takes effort to access, so you’re less likely to withdraw funds to splurge versus a savings account. Plus, you’ll want to avoid the penalties that come with early withdrawals.
- Tax advantages: While earnings from a regular Certificate are taxed, if you contribute to a traditional IRA CD, it is tax deductible in the year you contribute to it; you pay taxes on the money when it is withdrawn. A Roth IRA CD is not deductible, but earnings and withdrawals are tax-free. Please talk to your tax advisor about all the rules that apply to an IRA CD and a Roth IRA CD.
Our Certificates are designed to meet your investment needs. Want a high yield and control over the term, then our Flex-Term Certificate was made with you in mind. Available for a limited time, it currently offers 5.00% APY**, and you pick the term. Go short with a 3, 6, or 9 month term. Or go long, with terms ranging from 12 to 60 months. You’re in control. No matter which term you choose, you get the same impressive yield month after month after month. Visit your local branch or call us at 800.877.2345 to learn about all our Certificate options.
*Source: Bank Rate
Limited Time Offer Flex-Term Certificate available on new certificates. The following terms are available: 3 months, 6 months, 9 months, 12 months, 18 months, 24 months, 48 months, and 60 months. Yields are subject to change without notice. This is a promotional yield of 5.00% APY. “Flex-Term” Bonus Dividend may not be combined with any other dividend increase/bonus; i.e., “Direct Deposit Bonus” and “Jumbo Certificate” increased rates. Annual Percentage Yield (APY) is calculated on a 4.89% base rate, $1,000.00 minimum balance, regular Share Certificate requirement on a 365-day basis compounding monthly or at account closure. IRA share certificates do not qualify for this promotion. Deposit must be new funds to the Credit Union and may not be transferred or withdrawn and deposited back into the Credit Union from any existing Credit Union account. No additional deposits accepted (other than dividends) during the certificate term. There is a substantial penalty for early withdrawal of certificate funds. Fees and other conditions may reduce earnings. The Flex-Term promotional certificate will automatically roll over to the same term as the Flex-Term period selected at time of opening at the available rates of certificates at maturity. Federal regulations require dividends be paid from available earnings; dividends are contingent upon this regulation. Refer to our TISA Disclosure for terms and conditions.
**APY = Annual Percentage Yield. Yields are subject to change at any time. Early withdrawal penalty and fees could reduce the earnings on an account.