Saving & Budgeting

What is a certificate account?

Add more to your savings with a certificate account.

Key takeaways:

  • A certificate account can offer a higher return than a money market or savings account, but your money is ‘locked up’ for a certain amount of time.
  • Certificate accounts are federally insured, making this a less risky investment than stocks, bonds, or mutual funds.
  • You may choose from a variety of options in terms of duration and amount you invest.


Have you ever looked at the dividends earned by your savings and wished you could be earning more? If so, you may want to consider a certificate account. Certificate accounts give you a way to increase your earnings—they often pay higher dividends than regular savings accounts—and balance your portfolio with a low-risk, easy way to invest.




What is a certificate account?

A certificate account is a deposit account that typically offers a higher Annual Percentage Yield (APY) than your average savings account. Yields can be higher because you agree to leave your savings in the account for a set period—the longer the term, the higher the APY.

Certificate accounts are low risk because they are federally insured for up to $250,000 by the NCUA or FDIC depending on your financial institution. Because they grow at a fixed APY, you can count on the earnings as long as you don't withdraw your money from the account before the end of the term.

The minimum amount required for a certificate account is $500, and terms range from one month to five years. Once you put your money into a certificate account, it is “locked up” for that term. Early withdrawals incur penalties.


Why choose a certificate account?

A certificate account has a few important advantages over a standard savings account.

With a certificate account, your money can grow at a higher rate than in a typical savings account. While a share savings account might have an APY of 0.05%*, a $500 certificate account with a 1–2-month term can offer an APY of 0.15%*, which is three times higher. That may look like a small difference, but like all things involved with savings and interest rates, a little bit builds up over time. And certificate accounts with a higher balance and longer term earn even more.

Certificate accounts are well suited for short-term goals like saving for a down payment for a home, since tapping into your money before the term ends incurs withdrawal penalties.

Certificate accounts are federally insured for up to $250,000, making this a less risky place to put your money than stocks, bonds, or mutual funds.

Savvy savers split their money between several certificates with staggered terms to take advantage of the higher dividends while maintaining cash flow. This is called certificate laddering.

Because certificate account rates are locked in, you know what your return on investment is going to be over the term. Regular savings accounts have fluctuating rates that are affected by the economy, so you can’t always count on what you’re going to earn over time.

Certificate rates and inflation change, so it's wise to regularly check rates. View current rates.


What if I need that money for an unexpected expense?

Many people are deterred from opening an account because they are worried about not having access to those funds for the long term. While certificates are designed to hold your funds for a set length of time, there are a couple of options for accessing that cash if you need it:

  • Pledge of certificate loan. You may borrow funds against your certificate. That gives you the flexibility of accessing your cash while still earning dividends on your funds.
  • Early withdrawal. You may access funds before the maturity date, but there is a penalty.

A certificate account is like a savings account on turbo

Certificate accounts give you a solid, low-risk way to invest with the potential for higher earnings.

*Annual Percentage Yield (APY) as of 8/10/2022. 0.05% APY applies to standard share savings accounts. Rates are subject to change without notice. Certificate accounts are subject to early withdrawal penalties. For current rates, see our rates page.

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