August 24, 2023

Making the Most Out of Your Money with Certificates

Investing your money can be a daunting task, but with the right knowledge and resources, you can make the most out of your funds. Interior Federal Certificates offer a safe way to save while also allowing you to take advantage of higher interest rates than regular savings accounts. In this blog post, we’ll discuss what Certificates are, how they work, and why you should consider investing in them.

What are Certificates?

Certificates are a type of deposit account that offers a fixed rate of return over a predetermined period, usually ranging from six months to five years. Certificates are NCUA insured and offer higher interest rates than regular savings accounts, making them an attractive choice for investors who want to maximize their returns while protecting their funds.

How Do Certificates Work?

Banks and credit unions typically require a minimum deposit to open an account and guarantee a specific annual percentage yield (APY) for the duration of your term. When the term is up, you can take out your money or start a new Certificate with updated rates.

Certificates are considered low-risk investments since the return on investment (ROI) is guaranteed and NCUA insured. The funds deposited in your deposit accounts are safe from market fluctuations, inflationary pressures, and external economic forces.

How to Make Your Dreams a Reality with a Lifestyle Loan

Having dreams is easy, but turning them into reality is often challenging without proper resources. If you have been thinking about pursuing a dream project, you might need some financial support to make it happen. Fortunately, there are many options available in the market, and lifestyle loans are one of them. With the help of a lifestyle loan, you can bring your dream closer to reality without waiting any longer. Here are some factors you should consider before applying.

Understanding the Different Types of Certificates with Interior Federal

Not all Certificates are created equal. We offer different types of certificates, each with unique features and benefits. Let’s take a closer look at the different types to help you determine which one is right for your investment needs.

  • Jumbo Certificates

If you’re looking for a low-risk investment opportunity with high returns, then our Jumbo Certificate could be the right choice. With minimum balance requirements of $100,000 and terms from 6 months to 60 months, this type of certificate provides a secure and reliable way to grow your money. Your initial deposit is guaranteed no matter what happens in the economy, giving you peace of mind that your funds are safe. The same rate applies throughout the term of the certificate, so you don’t have to worry about any sudden fluctuations.

  • Bump-Up Certificates

Bump-Up Certificates offer an opportunity to improve your rate of return when interest rates rise during your term. With this type of certificate, you can take advantage of rising dividend rates without having to commit to a new or longer term. Bump-Up Certificates are available in terms of 20 and 56 months and balance requirements start at $500.  20 month certificates can bump up to the 24 month rate, and 56 month certificates can bump up to the 60 month rate one time during the term.

  • Accumulator Certificates

Accumulator certificates are an excellent saving option for Little Buffalo Accounts, Teen Accounts, and Young Adult Accounts when you want to maximize returns while still having access to their funds. With a minimum opening deposit of just $50 and the ability to add additional funds during the life of the certificate, accumulator certificates can help your children reach their savings goals faster.

Weighing the Pros and Cons of Certificates

Certificates are considered a low-risk investment option, but like any investment decision, there are both advantages and disadvantages to consider. Here are the pros and cons to help you make an informed investment decision.


  1. A Higher Interest Rate Than a Traditional Savings Account: The most significant advantage of a certificate is the higher interest rate than traditional or other savings accounts, including money market accounts. This makes it an attractive option for individuals who want to earn more on their savings. The interest rate for a certificate is fixed at the time of purchase and remains constant throughout the term of the certificate.
  2. Guaranteed Returns: Another advantage of a certificate is that it provides guaranteed returns. You are guaranteed a return on your investment over a specified period. You don’t have to fret about stock-market fluctuations or losing your initial investment.
  3. Low-Risk Investment Option: Certificates are considered low-risk investments since they have National Credit Union Administration (NCUA) insurance protection of up to $250,000.  In case of a bank failure, your investment will be returned to you.
  4. Flexible Term Options: A certificate offers flexible term options, ranging from a few months to several years. A short-term certificate is ideal if you need your investment returned within a shorter period, while a long-term certificate is suitable for individuals looking for more significant returns over an extended period.


  1. Limited Access to Funds: The main disadvantage of a certificate is that it locks your funds for a specific period, which limits access to your money until the certificate matures. If you need your money before the maturity date, you will have to pay a penalty, which could be a reduction in the interest earned on the investment.
  2. Potential for Inflationary Losses: Although certificates offer a guaranteed rate of return, their interest rates do not usually keep pace with inflation. If you have a long-term certificate, inflation may cause its value to decline over time. When inflation rises, the purchasing power of your money decreases, so even though you earn interest, you may be able to buy less with the money earned.

How to Choose the Right Certificate

When choosing a certificate, there are many options to choose from. But how do you go about choosing the right one for you?

We will go over the steps to assess your financial goals, determine the appropriate term length, compare interest rates and terms from different banks and credit unions, and when to consult with a financial advisor.

  • Assessing Your Financial Goals: Before choosing a certificate, it is essential to assess your financial goals. Evaluate your current financial standing, what you hope to achieve, and how much risk you are willing to take. Determine how much money you can comfortably put into a certificate without negatively impacting your budget. Certificates come in different types, with some requiring higher minimum deposits than others.
  • Determining the Appropriate Term Length: Once you have determined your financial goals, the next step is to decide on a term length. Certificates come with different terms, generally ranging from 6 months to five years or even more. While this depends on the financial institution, the longer the term, the higher the interest rate. If you need your money back soon, choose a shorter-term. If you have a long-term financial goal, choose a longer term to maximize your earnings.

  • Comparing Interest Rates and Terms from Different Institutions: Banks and credit unions offer different interest rates and terms for their certificates. It’s a good idea to shop around and compare interest rates and terms from various banks to find the best deal. However, ensure that the bank or credit union you choose is FDIC or NCUA insured, meaning your money is protected.
  • Consult with a Wealth Advisor: If you are unsure about which certificate is right for you, consult with our wealth advisor. They can advise you on the best course of action based on your financial goals. This includes the amount you can afford to invest and the term length that makes sense for you.

Can Certificate Rates Change After Opening an Account?

Once you open a certificate account, the interest rate is locked in for the term of the certificate. This is one of the benefits; you know exactly how much interest you’ll earn on your investment over a set period of time. However, certificates with variable interest rates do exist but are less common. With a variable-rate certificate, the interest rate may change over time based on market fluctuations.

Certificates can be an attractive investment option for those looking to diversify their portfolio while earning a fixed interest rate. They offer the benefit of safety and stability as they are FDIC-insured or NCUA-insured, and interest rates are locked in once you open an account. However, it is important to remember that if you withdraw your funds early, you may be subject to early withdrawal penalties. Thus, it is essential to evaluate your individual financial goals and risk tolerance before investing in certificates. 

Related Content: Diversification

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