Unlock more flexibility with this share certificate strategy

Share certificates simplified 

A share certificate is a fixed term savings account with a guaranteed dividend rate for the term of the certificate, similar to the certificates of deposit (CDs) offered by many US banks. At UNFCU, the term can be as short as three months or as long as 60 months. When the certificate matures, you can renew it¹, withdraw the money, or deposit the money in a different account. 

If you keep your money in a share certificate, you will enjoy two big advantages: 

• Share certificates generally offer higher dividends than other savings accounts. 
• The rate you earn will not go down over the term, even if rates are generally trending downward. 

Share certificates do require some planning ahead, because withdrawing money early can result in early withdrawal penalties. Let's look at how increasing the variety of your share certificates can make them a more flexible tool. This strategy is often referred to as diversification.  

Benefits of diversifying your share certificates through laddering

Plan for your expenses more effectively 

If you open several share certificates with different terms, you can spread out the maturity dates. This strategy is called laddering and allows some of your money to become available each time one of your share certificates matures. 

Think about the available terms in relation to times you may need more cash on hand.

Are you planning a wedding? You could open a share certificate that will mature in time to cover the related expenses.

Does your spending tend to increase during the holidays? You could consider another share certificate set to mature when your January credit card bill comes due. 

Lock in today's rates

While share certificates offer a guaranteed rate during the certificate's term, the rates for new certificates can always change. If you expect rates to fall, you may be especially eager to lock in today's rates on longer-term certificates. Over 48 or 60 months, small differences in dividend rate can add up.

Through laddering, you can lock in the most advantageous rates while maintaining periodic access to funds. When one of your shorter-term certificates matures, you can always renew into that longer term if the rate is still competitive.

Adjust your strategy as needed to maximize returns

Diversifying your share certificates can also provide you with more opportunities to review your savings strategy and adjust as needed. Each time one of your share certificates matures is a chance to look at the current rates. You can then make the decision whether to renew or open a different share certificate. When rates are changing frequently, staggered maturity dates provide you with more agility to react to market conditions.