Saving money can be difficult these days, and it may be tempting to make withdrawals from a savings account when it feels like funds are getting a little short. Of course, that’s one purpose of savings accounts—to be there to fill gaps when needed.
However, there is a way to “lock” your savings and let it grow over a set term. Certificates are an effective way to save money over a specific period and dividend rate. This ensures your money is secure and will provide a predictable return to help in your budgeting and financial plans.
At SAFE, we have various certificates that have their own flavor, so to speak.
- Term certificates offer terms that range from 3 to 60 months, giving flexibility to meet short- and long-term savings goals.
- The Bump Up Certificate permits members to take advantage of a rate increase if one becomes available during the 12-month term.
- The Add On Certificate lets members add as much money as often as they’d like during the 12-month term. This is SAFE’s most accessible certificate with a minimum opening deposit of only $25.
- SAFE also offers limited-time certificate specials featuring higher dividend rates throughout the year, so be sure to be on the lookout for those!
- All our certificates pay dividends monthly.
Here are four ways to use certificates as part of an overall savings plan.
Save For the Long Term
Whether you are saving for a new home, car, vacation or simply want to diversify your savings, consider adding certificates to an overall financial plan. With terms up to 60 months, certificates are an option for meeting short- to long-term savings goals. To maximize savings, look into laddering certificates, where one certificate comes to term each year and that money is reinvested into a new certificate at the end of the term.
Stash Funds Away for a Specific Purpose
While saving for taxes, holiday spending, and other recurring expenses, consider using the Add On certificate. The certificate allows members to add as much money as often as they’d like over the term while maximizing returns with higher dividends than a regular savings account provides. You may as well get some extra money while saving! You can even ladder Add On certificates, taking advantage of the certificate’s 12-month term.
Take a Breath Before Spending a Windfall
Before spending windfalls such as tax refunds, bonuses and inheritances, take a breath and put the money aside for a bit. This benefits you in two ways: it gives time to plan out how to spend the money smartly and your money earns higher dividends than it would in a regular savings account. Need just a few months? Consider a 3-month or 6-month term certificate. Want to take your time and grow your money further? Look into a Bump Up certificate to take advantage of a rate increase or certificates with longer terms.
Teach kids patience
SAFE believes in helping the next generation learn healthy financial habits, and we offer savings and checking accounts that help children learn healthy financial habits and create opportunities for positive conversations around money. Certificates are a part of that mix and take lessons in savings one step further by teaching patience. The Add On certificate is a great way to introduce kids to certificates with its $25 minimum opening deposit and ability to add money throughout the term. Holiday gift money, allowance and pay for chores can be added to the certificate throughout the term. At the end of the term, families can release the funds for their children’s use or put it back into another certificate to let the money grow even further—and teach even more patience!
Remember to keep in mind that certificate penalties for early withdrawals may apply, and fees may reduce earnings on accounts. Be sure to find all the details on SAFE’s certificates and current rates on safecu.org.
Learn More
