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Bottom Line Up Front

  • Certificates can give you better interest rates than typical savings or checking accounts. When you get them from your credit union, they’re called share certificates. If you get them from your bank, they’re called Certificates of Deposit or CDs.
  • Certificates mature in the future. The advantage here is you can set your vacation savings aside (without temptation to spend) and time your maturity date to when you’ll need the money.

Time to Read

2 minutes

May 15, 2022

Investing in certificates—which are sometimes called share certificates, certificates of deposit and CDs—makes growing savings simple. And, they’re a great way to save for travel expenses because you can choose terms to suit your saving needs. With a certificate, you agree to leave money in that account for a set amount of time and for a set return on investment. And, whether you want to save money for a getaway or something else, there are strategies to maximize that return. 

Short-Term Saving

Newlyweds James and Yolanda received $8,000 in wedding gifts. They want to take a long honeymoon, but they want to wait until they can take an extended vacation overseas. They decide to purchase a 12-month certificate, so their funds will be available in one year. If they get a good deal on airfares, they can invest the leftover money in a 4-year certificate to start saving for their fifth anniversary.

Setting a Goal 

Harris is a First Lieutenant training to compete in a triathlon in Hawaii. He inherited some money that would allow him to go, but he isn’t ready to qualify yet. Harris decides to invest his inheritance in a 5-year certificate. He knows having the money safely waiting in a bank account earmarked for his goal will motivate his training. And, it ensures that when he’s ready for the race, his vacation budget is ready.

Climbing the Savings Ladder

Margaret is a retiree who has waited to travel the world. She wants her money to keep growing in a high-yield savings account, but she wants access to it for travel. She has $20,000 to devote to a laddering savings plan. Instead of buying 1 $20,000 certificate, she buys 5 $4,000 certificates with staggered maturity dates of 12 months, 24 months, 3 years, 4 years and 5 years. As each certificate matures, Margaret will use what she needs for her travel fund and invest the remainder into another 5-year term.

Using this money-saving strategy, Margaret will have $4,000 available for her vacation savings account every year for the next 5 years. Each year, as she invests in a new 5-year certificate, she could earn a higher rate than if she bought another shorter-term certificate. But, because she laddered the initial investment, she still has liquid money available every year. Another personal finance advantage is that after 4 years, she’ll have a higher-rate 5-year certificate maturing every year.

Calculate Your Savings

Find out how much you can earn on a certificate. Just enter a few pieces of information, and we will calculate your interest and ending balance.

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Calculate Your Savings

Find out how much you can earn on a certificate. Just enter a few pieces of information, and we will calculate your interest and ending balance.

Get Started

Think About Your Savings Strategy

What’s your savings goal? Could certificates fund your next great adventure? Read more about certificates from Navy Federal. 

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This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.