Temperatures are Rising and so are Rates on Certificate Accounts

Certificate accounts are savings tools to help your money grow.

While there are plenty of saving options to help you get the most out of your hard-earned dollars if you’re looking to earn more than you would by simply holding your money in a regular savings account, a certificate account could be a better option for your money. That’s especially true now because rates are up!

For example, you can now maximize your earning potential with a Hughes Federal Credit Union 36-month Certificate Account which earns an annual percentage yield rate of 3.05% and requires a minimum balance of $1,000.00*.

How do certificate accounts work?

A certificate account or gives you the opportunity to earn more with a higher fixed dividend rate in exchange for keeping your money locked in an account for a certain amount of time, also known as the term.

Terms usually range from six months to five years. Once the certificate account matures, you’ll receive your principal balance (what you initially deposited) plus any interest accrued. You then have the option to cash out or reinvest your money into another certificate account.

Unlike savings accounts, you cannot make further deposits into the account or withdrawals before the end of the term. 

Certificate accounts at credit unions are insured by the National Credit Union Administration (NCUA) so they are considered a relatively low-risk savings option. Certificate accounts carry minimum balance requirements, but you can start saving with as little as $1,000. 

How much can you earn?

The dividend rate you receive usually depends on two factors: the term and the amount of money you're depositing. Usually, the longer the term and the more money that’s invested, the higher the dividend rate. The dividend on a certificate account at Hughes is compounded daily and credited each month.

What happens if I need to withdraw money before the maturity date? 

The promise of a better dividend rate in exchange for securing your money for a certain amount of time is one that will end up costing you if you’re unable to keep that promise. If you happen to need access to your money before the withdrawal date, you’ll face some penalties.

How do I choose a Certificate Account?

Before deciding on acertificate account, it’s important to assess your financial situation, goals and future needs. If you’re looking to keep savings secure for a few years with no intention of spending it, then a certificate account could be a good option. If you're just building savings, then it might be a good idea to stick to a regular savings account or a Money Market account.

Having an emergency savings account is always a good idea when opening a certificate account. In the event you happen to need access to funds, you won’t have to dip into your certificate account and face penalty fees that could derail your savings plan.

In addition to certificate accounts, you can earn more on your savings with a Hughes Money Market Savings account. With just a minimum deposit of $1,000, you can earn an Annual Percentage Yield of .50 percent. Higher Money Market Savings rates are also available for higher deposit balance minimums.

Certificate account dividends are compounded daily and credited monthly, while savings and Individual Retirement Account (IRAs) dividends are compounded daily and credited quarterly. Rates and terms are subject to change at any time and fees may reduce earnings.

To learn more about how to maximize your savings potential, stop by a branch or visit Hughesfcu.org today.