Navy Federal Credit Union
Navy Federal Credit Union

The Ultimate Certificate Strategy

Laddering your certificates is an excellent way to ensure you earn the best rates possible. It allows you to control the terms while getting the liquid availability you want. For example, instead of opening one 5-year certificate for $25,000, open five certificates for $5,000 each for the following terms:

  • 12 months
  • 24 months
  • 3 years
  • 4 years
  • 5 years

As each certificate matures, you can either use the funds you need or renew into another 5-year term
like in the example below.

Original Term Original Maturity Date Renew into Next Maturity Date
12 Month 5-Year
24 Month 5-Year
3 Year 5-Year
4 Year 5-Year
5 Year 5-Year

So why ladder? Because you will always have 20% of your certificate savings available each year, and when you renew each maturing certificate into a 5-year certificate, you will be earning a higher rate than if you had simply continued with another 12- or 24-month certificate (laddering is not limited to the 12-month through 5-year example above). The strategy works to your advantage because after a few of your certificates mature and are renewed into another 5-year certificate, you will be earning the highest rate and have a 5-year certificate maturing every year.

The same idea can be applied to shorter and longer-term examples. And it's really up to you how you want to save and use your funds. Laddering can provide you with a more steady and stable source of savings than a single-certificate investment. The best part is, you can always add funds to your certificate at maturity and watch your savings grow!

Certificate Laddering Calculator

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Rates/Terms
  • Mortgages5/5 ARM as low as+
    3.403%APR
  • Auto Loansas low as+
    1.49%APR
  • Certificatesas high as
    3.00%APY
  • Checkingas high as
    0.45%APY
  • Credit Cardsas low as++
    7.99%APR
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