Navy Federal certificates are great savings options as they typically earn higher dividends than regular savings accounts, therefore helping you reach your financial goals faster. With a certificate, you choose how much money to put in and how long to let those savings grow—there’s always a minimum initial deposit amount; terms can range from a few months to several years. Choose the term that best fits your timeline for using the money, but keep two things in mind:

  1. In most cases, the longer your certificate term is, the higher your dividend rate will be.
  2. You may have to pay a penalty if you make a withdrawal before the end of the term.

Once you select a term, you should be prepared to keep your certificate until it matures. With a standard certificate, you know what the value of your money will be at maturity, which is helpful for budgeting and building your savings.

As the Maturity Date Nears

When your certificate reaches maturity, you have access to your original deposit amount plus the dividends that money has earned over its term.

Your financial institution will send you a notice when your certificate is about to mature. The notice will tell you the date by which you must let the financial institution know what you want to do with the money. It will also notify you what will happen to the funds if they receive no instructions by that date—the money may roll over to a new certificate with a term that closely matches your mature certificate, but the rate may be different, and it could be lower depending on current rates.

Be Ready and Know Your Options

When your certificate matures, you generally have these options for your money: cash out or renew the full amount or a specific amount. If you want to continue saving, it’s a good idea to check current rates first to help guide your decision.

  • Cash out. If you have the whole amount of your mature certificate earmarked for a specific goal, you may choose to have all the funds transferred to your checking account. If you want to continue saving your certificate funds but have ready access to it, you may decide to have the funds transferred to your savings account. While it’s in savings, you can explore other savings options if you desire to move funds to an account with a higher rate. If your financial goal is long-term, such as retirement, you may consider moving the funds to an IRA.
  • Renew to a new certificate. If you prefer a higher rate and are comfortable not having access to your funds for several months, you may choose to renew your certificate funds to a longer-term certificate. Laddering certificates, such as choosing terms with maturity dates of every six months or so, can give you more saving flexibility with certificates. If you prefer to renew a partial amount, then you may choose to renew for a specific amount and let the remaining funds have the opportunity to keep growing by renewing them to a new certificate or other savings product.

Laddering Certificates Can Help Step Up Your Savings

Certificate dividend rates are influenced by prevailing interest rates set by the Federal Reserve and tend to go through periods of increases and decreases. You can take advantage of rising rates and lessen the impact of falling rates with a strategy called “certificate laddering.” Laddering can help you benefit from the higher rates generally available with longer certificate terms while maintaining more frequent, penalty-free access to your money.

We Can Help You Explore Options

At Navy Federal, we offer certificates as well as many other ways for you to save money and manage it wisely. Let us help you make money moves that are right for you and your goals.

This article 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.