This article is sponsored by PenFed Credit Union
Certificates are a great way to maximize your savings while minimizing your risk. If you already have certificates or are considering using them to bolster your savings, there are several things you can do to enhance your investment.
Although you “lock in” your certificate interest rate when you invest in it, rates can vary widely depending on where you purchase your certificates. In addition, longer terms usually mean higher rates, making them a great choice for those who have the time and resources to put money aside for more than a year or two.
PenFed offers a range of certificates, with terms from 6 months to 7 years. Members can easily invest in these certificates online, so there’s no need to go into a branch. That efficiency also means PenFed is able to offer some of the highest rates around — often several times the national average. And all our certificate products are federally insured to at least $250,000, so your investment is protected. If you have certificates with multiple banks that are about to reach maturity, you might consider consolidating them into one certificate with a higher rate.
Climb the Ladder
Laddering is a strategy that balances access to your money with better returns from longer investments. With a certificate ladder, you invest in multiple certificates with different terms. For example, instead of depositing $5,000 in one certificate, you might put $1,000 in five different certificates, with terms of 1, 2, 3, 4 and 5 years, respectively. That means every year for the next five years, you’ll have a certificate reaching maturity. After a year, your first certificate is accessible again if you need it—or you can put it in a five-year certificate, adding another rung to your financial “ladder.”
Keep Your Eye on Your Investment
Before your certificate reaches maturity, your bank or credit union will contact you. This is your chance to re-assess the market, look at how rates have changed since your initial investment and evaluate your portfolio. You may decide to put the money into a certificate with a different term, a certificate with a better rate or even a different kind of investment. The important thing is that you make a thoughtful decision in order to do what’s best for your financial situation.
Ready to Save More?
Contact PenFed Credit Union to see our wide range of certificate terms and competitive dividend rates. Call 800-247-5626 or visit PenFed.org.