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Is this a Good Time to Open a Share Certificate?

Is this a Good Time to Open a Share Certificate?

Q: I’m looking for a place to park my savings, so I’m thinking about a share certificate account. Is this a good time to open one?


A: Today’s economic climate makes a certificate a fantastic, secure choice for growing your funds. Let’s take a closer look at this savings account and why it’s the perfect time to open a certificate.


What is a certificate account?


A certificate is an insured savings account with a fixed dividend rate and fixed date of maturity, or term. The dividend rates of these accounts are usually higher than those on savings accounts, but access to funds is more limited.


Is this a good time to open a certificate?


With recent reports of cooling inflation, and interest rates at their highest in recent memory, this can be a great economic climate for certificates. Here are four reasons why it’s good to open a certificate:


  1. High dividend rates.  In today’s high-interest environment, funds in certificates have favorable dividend rates. According to the FDIC, interest rates on traditional savings accounts hover at 0.40%, while rates for certificates average from 4-5%, or even higher. 

  2. Reliable dividends rate. Rates for certificates are locked in for the term of the certificate. This is especially beneficial during an environment of high interest rates and an uncertain economic future like we face today.

  3. Safety and security. The security of your funds is always a priority, but in light of recent bank failures, it’s more important than ever. Also, certificates at New Orleans Firemen's Federal Credit Union are federally insured by National Credit Union Administration (NCUA) up to $250,000. 

  4. No access to your funds. Limited accessibility with certificates can be a great advantage in today’s environment. With your funds locked until the end of the term, you’ll be forced to leave them or risk paying a penalty. This will lower the temptation to overspend and neglect your savings. Please note, though, that it’s only wise to open a certificate if you will not need to access these funds until the term ends.


Use this guide to learn why this is a great time to open a certificate. 

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