If you have a large amount of extra money sitting in your savings for a rainy day and you plan on keeping it there for a while, you may want to consider putting it into a certificate.
Certificates are kind of like savings accounts, except they have much higher interest rates, and instead of making deposits and withdrawals from them regularly, you leave your money alone and let it grow.
This is how it works: you’ll put down a sum of money, usually a larger sum . You’ll agree to a term length, which may be anywhere from a few months to several years. (The longer your term rate is, the higher your interest rate will be.) Then, at the end of your term, you’ll have a lot more than if you kept that same amount of money in a regular savings account.
During that time, you won’t be able to access that money unless you pay a penalty, so certificates are best for people who already have more than enough in their savings to cover emergency expenses, down payments etc. Certificates are therefore best used for storing your bonus money.
You could also invest that money elsewhere, but one major benefit of certificates is that they’re federally insured. Ours are insured by the National Credit Union Administration. For this reason, certificates are ideal for people who want a low-risk way to grow their wealth. With stocks, the value of a share might plummet, but with a certificate, you are guaranteed to get back what you put in and more.
If you’re thinking that a certificate might be a good option for you, get in touch with us. If you open a 20-month certificate with TruStone before September 30, you could earn a competitive rate of 2.22% APY!*
To learn more about certificates, check out this page from NerdWallet.