Value of Certificates Article
3 Benefits of Investing with Certificates of Deposit
Share Certificates, are a type of savings certificate with a fixed interest rate and a fixed term length, culminating in a date of withdrawal, known as the maturity date. The longer the term length, the higher the interest rate you'll earn. When a member invests money in a Share Certificate, they agree to leave the money in an account for a set amount of time during which they cannot access the funds without paying a penalty. Below are some benefits to consider when planning where to invest your money for the future.
Guaranteed rate of return
When it comes to Share Certificates, what you see is what you get, no matter what happens to the economy. Similar to your savings account, they're insured by NCUA up to $250,000. View GEICO FCU's rates and maturities here.
Low Deposit Requirements
Many Share Certificates have low minimum deposit requirements that allow you to start saving without huge sacrifices. As a reference, GEICO FCU's lowest minimum deposit is $25 for a 12-Month Share Certificate.
Use for 1-5 Year Savings Goals
Share Certificates are a great way to savings goals that you plan to accomplish within the next few years such as a down payment on a house, new car, family vacation and/or anticipated home repairs. This is money that won't be used for years and can stay safely out of reach for a few months or years depending on the term length.
Please Note - Penalties for Early Withdraw
While certificates of deposit are a great way to save for long-term goals, you should take note of the penalties for early withdraw (sometimes several months of interest accrual) and weight the extra money you'll earn in interest with a Share Certificate against if you'll need the money during the term length and the penalties of accessing the money.