Not long ago I spoke about annual percentage yields and used a share certificate deposit as an example. Certificates are fixed-term deposits that you make with a financial institution and they reward that fixed-term by offering you a higher percentage rate and yield than they do on a regular savings. The catch, of course, is that the money is in a fixed deposit, you can’t touch it without incurring penalties, until the term that you set for it expires.
They are an excellent investment for extra savings that you don’t want to risk by putting into other potentially higher-risked forms of investment.
Now that rates are at a historical low, I will talk about Step-Up certificates available that the Credit Union, as they offer the possibility of higher returns with a tiny amount of sacrifice.
If you are an investor who wants a long-term certificate but hate the prospect of rates going up while your funds are locked at a certain rate, Step-Up Certificates are for you. They are also for you if you are a person who has a relatively good grasp of the economy and expect interest rates to go up in the next few years.
Step-up Certificates are offered in longer-terms than regular CDs. Investing in one of these must be on a term from 12 to 60 months. They also start at lower APR and yields (that’s the tiny sacrifice) than regular certificates.
The beauty of Step-Up Certificates lies in that you may request, in the future, to have the rate increase one or two times (depending on the length in time that you chose) to match current rates if they have gone up. And if the rates don’t go up but down, you sit enjoying the fact that your rate is safely locked in.
So, if you think you’re in the know, and believe the rates will go up, consider opening a Step-Up Certificate soon.
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