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NOTICE: The financial community is seeing an aggressive increase in scams and phishing.

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Understanding the Benefits of Savings Certificates

Happy couple sitting at home, putting coins into a piggy bank, using a laptop.

What is a Savings Certificate?

A savings certificate (also known as a share certificate or a term share certificate) is a type of high yield savings account offered by credit unions where you can store your earnings. It provides a secure way to grow your savings while offering specific terms and predetermined interest rates. Savings certificates are popular among individuals who want to maximize their savings while enjoying the benefits of a fixed timeframe and stable interest rates.  There are two main parts that make up a savings certificate, a fixed timeframe and an earned interest rate.

  • Fixed Timeframe:  When you open a savings certificate, you agree to keep your money deposited for a specific period of time, which can range from a few months to several years. This predetermined time frame ensures that your funds remain securely invested.  During this term, you are unable to withdraw the funds without incurring penalties. The length of the fixed timeframe plays a significant role in determining the interest rate you will earn. In general, longer terms offer higher interest rates, rewarding you for committing your funds for an extended period.
  • Interest Rate: With your account secured for a fixed timeframe, the credit union offers a predetermined fixed interest rate that remains constant throughout the term.  This means that regardless of any changes in the market or national interest rates, your earnings remain stable and predictable. The fixed interest rate provides you with financial certainty and allows you to plan your savings growth effectively. Unlike some other savings accounts where interest rates may fluctuate, savings certificates provide stability and peace of mind.

By choosing a savings certificate, you can leverage the power of compound interest to increase your savings over time. The longer your funds remain invested and the higher the interest rate, the more your savings will grow. It’s important to consider your financial goals and timeline when selecting the term and interest rate for your savings certificate.

What is the difference between a Savings Certificate and a Certificate of Direct Deposit (CD)

Savings certificates offered by credit unions are similar to Certificate of Deposit (CD) accounts provided by banks. Both options offer secure and reliable ways to save and earn interest. The primary difference lies in the financial institutions that offer them. Credit unions are member-owned organizations, while banks are for-profit institutions.

What if I need to pull my money out early?

While savings certificates provide attractive interest rates, it is important to understand that they require a commitment to keep your funds deposited until the maturity date. Withdrawing money before the certificate reaches maturity may result in early withdrawal penalties. The penalties can vary depending on the specific terms of the savings certificate and the timing of the withdrawal. Review the terms and conditions of your savings certificate carefully to understand the potential penalties associated with early withdrawals. If you have any questions or concerns with your UCCU savings certificates, you can consult the disclosure link HERE or by contacting your local UCCU branch for more detailed information.

How do I set up a Savings Certificate?

To begin, visit any UCCU branch and ask for assistance in opening a savings certificate account. A branch member service representative will guide you through the account setup process, ensuring that you make informed decisions based on your financial goals and circumstances. They will take into account factors such as your desired term length and the amount of money you want to deposit.

During the setup process, you will need to provide some personal information and complete the necessary paperwork. We will explain the terms and conditions of the savings certificate, including the fixed timeframe and the associated interest rate. It’s important to carefully review all the details and ask any questions you may have before finalizing the account opening. We will be there to assist and ensure that you have a clear understanding of the savings certificate and its benefits.

What is a Jump Up Feature on a Savings Certificate?

A Jump Up feature is an additional benefit offered with some savings certificates. It allows you to upgrade a Standard Certificate for only a 0.20% reduction in the Annual Percentage Yield (APY). This feature adds flexibility to your savings strategy by enabling a one-time rate jump up during the life of your certificate. In the event that interest rates increase, you won’t miss out on the opportunity to earn more on your savings.

With the Jump Up feature, if interest rates rise, you have the option to request a one-time rate adjustment on your savings certificate. This adjustment allows you to earn a higher interest rate without needing to open a new certificate or incur any penalties. The Jump Up feature is particularly valuable in a rising interest rate environment as it allows you to maximize your earnings. Before opting for the Jump Up feature, it’s important to carefully evaluate your financial situation and assess whether it aligns with your savings goals.

Are there other options outside of Savings Certificates?

Certainly! While savings certificates provide a secure and high-yield savings option, it’s worth considering alternative choices to ensure that you make the most suitable decision for your financial needs. One such alternative is opening a Money Market Account. Money Market accounts offer higher earned interest rates compared to regular savings accounts while still allowing the flexibility to withdraw funds as needed. Money Market accounts are often seen as a middle ground between savings certificates and regular savings accounts, offering a balance of high yields and liquidity.  To learn more, you can find more information on our UCCU’s Money Market Account web page.

Where can I learn more?To determine if a savings option, such as a savings certificate or money market account, is suitable for your financial goals, speak directly with one of our experts at any UCCU branch or call us at 801-223-8188.  They will provide personalized guidance and will address any questions or concerns you may have. Additionally, you may also find additional information at www.uccu.com/supercharge.