Articles Certificate Maturing? Know Your Options

November 17, 2014

What are your dreams? Do you look ahead to buying a car or a home? Perhaps your goal is to send your kids to college, make some improvements to your house or simply jet off on a tropical vacation for a few weeks? Whatever your dreams may be, certificates may be just the savings tool you need to achieve them.

Certificates typically earn higher dividends than those of regular savings accounts, helping you to reach your financial goals faster. With a certificate, you choose how much money to put in and how long to let those savings grow; initial investments are subject to minimum purchase amounts, and terms 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:

  • In most cases, the longer your certificate term is, the higher your dividend rate will be.
  • 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.

Pick the Right Term

When your certificate reaches maturity, you have access to your original deposit amount plus the dividends that money has earned over its term. With a standard certificate, you know what the value of your investment will be at maturity, which is helpful for budgeting and building your savings toward your dreams.

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 and also what will happen to it if they receive no instructions by that date.

Make the Right Choice

Your options include:

  • Cash out the certificate and put the money toward obtaining one of your financial goals.
    • Pro: You're on your way to realizing one of your dreams.
    • Con: Your certificate savings are wiped out; you have to start at square one to fully achieve that dream or begin saving for one of your others.
  • Roll the certificate over to a new certificate with the same or different term.
    • Pro: Your savings keep growing, and you have an opportunity to choose a term in line with your current goals and timeline.
    • Con: You don't receive any cash to spend now.
  • Withdraw some of the money and roll the remainder into a new certificate.
    • Pro: You receive some cash now and still have savings that keep growing.
    • Con: Your savings won't be as large as if you'd left them untouched.

Consider Rates, Too

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 “laddering.” Read more about how certificate laddering can help you benefit from the higher interest rates generally available with longer certificate terms while maintaining more frequent, penalty-free access to your money.
Check out Navy Federal's rates or open a certificate now.

Federally insured by NCUA. 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.


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Navy Federal Credit Union is federally insured by the National Credit Union Administration.

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Investors should carefully consider the investment objectives, risks, and charges and expenses associated with municipal fund securities before investing. This and other information about municipal fund securities is available in the issuer's official statement which can be obtained directly from the issuer, or if distributed through a broker dealer, may be obtained from a financial adviser, and should be read carefully before investing.

An investor should consider, before investing, whether the investor's or designated beneficiary's home state offers any state tax or other benefits that are only available for investments in such state's qualified tuition program.

If a municipal fund security describes one or more of their investment options as having the characteristics of a money market fund, it is important to know that an investment in the security is not insured or guaranteed by the FDIC or any other government agency (unless such guarantee is specifically provided by or on behalf of such issuer) and, if the security is held out as maintaining a stable net asset value, that although the issuer seeks to preserve the value of the investment at $1.00 per share or such other applicable fixed share price, it is possible to lose money by investing in the security.