Certificate Accounts: An Owner's Manual

They go by many names: certificates, term deposits, CDs, time deposits and fixed deposits. No matter what you call them, they can sometimes be the forgotten investment. While many people prefer the prestige of the stock market or the simplicity of an interest-bearing savings account, a certificate is a great balance between the two.

When you’re looking for ways to put your money to work for you, a certificate can be a great alternative.

What is a certificate​?
In exchange for a higher interest rate, certificates require you to commit to keeping your money invested for a certain amount of time. You can choose a term from as little as six months to as long as 60 months. Dividend rates typically increase with longer terms while penalties are assessed if you access your money before the certificate matures.

What are the rates?
The dividend rate is the rate at which you’ll earn dividends for the life of the certificate—this rate will differ from institution to institution. You’ll also probably see an APY rate. This means annual percentage yield and is usually higher than the dividend rate because it takes into consideration the effects of compound interest—which includes the principal amount plus any dividends gained in previous periods.

Is short- or long-term better?
To answer this question, you must think about two things: when you’ll need access to the money and if you think dividend rates will go up or down. If you’re saving for a vacation, make sure the term you choose coordinates with the deadlines of your trip. If you’re saving for college tuition and your child is small, choose a longer term to get a higher return. As far as dividend rates rising or falling, do some research or speak with a financial advisor to estimate any trends.

Why invest in certificates?

• In addition to getting a better return than a typical saving account, certificates are great for conservative investors. They are FDIC-insured up to $250,000 which means you assume less risk than with bonds, stocks or other unpredictable investments.

• There’s a wide selection of certificates available. Choose from different maturity dates from thousands of different financial institutions. You’ll certainly find one that meets your needs.

• Count on the return. Since you lock in your dividend rate at the beginning of the term, you will know exactly what you’ll come away with at the end.

Boost your savings and prepare for your financial future by securing a certificate account from Mountain America Credit Union. We have certificates with maturity dates ranging from six to 60 months. And don’t miss our new option—Growth Certificates. Now you can make additional deposits during the life of your certificate to boost the value. Open your account online or in-person at one of our convenient branches.