Certificate Frequently Asked Questions | First Tech Federal Credit Union

Q: What is a Certificate Ladder?

Building Your Certificate Ladder Certificates are one of the easiest and safest ways to earn higher rates on your savings. You may ask yourself: What term length is best? What should I do when the certificate matures? What do I do if I don’t want my money tied up for too long? Certificate laddering is a strategy that you can utilize to maximize your returns while eliminating any worries about not having access to your funds. Here’s how it works: You deposit equal amounts of money in short-, medium- and long-term certificates maturing at staggered intervals—like the steps of a ladder. When your short-term certificate comes due, reinvest the proceeds in a long-term certificate. Eventually your ladder will consist of only long-term certificates, which typically offer higher rates than short-term ones do. For example: Let’s say you have $5,000 in your savings account and you have no plans to spend it soon. You might consider a certificate ladder that matures in one-year increments: A. $1000 in a 12 month certificate B. $1000 in a 24 month certificate C. $1000 in a three year certificate D. $1000 in a four year certificate E. $1000 in a five year certificate At the time the 12 month certificate matures, buy a new five year certificate. When the 24 month matures, buy another five year, and so on. In five years, you’d have only the higher-yielding five year certificates in your ladder—and every year one of them will mature giving you access to the funds if you want it.

Building Your Certificate Ladder

Certificates are one of the easiest and safest ways to earn higher rates on your savings. You may ask yourself: What term length is best? What should I do when the certificate matures? What do I do if I don’t want my money tied up for too long?

Certificate laddering is a strategy that you can utilize to maximize your returns while eliminating any worries about not having access to your funds.

Here’s how it works:
You deposit equal amounts of money in short-, medium- and long-term certificates maturing at staggered intervals—like the steps of a ladder. When your short-term certificate comes due, reinvest the proceeds in a long-term certificate. Eventually your ladder will consist of only long-term certificates, which typically offer higher rates than short-term ones do.

For example:
Let’s say you have $5,000 in your savings account and you have no plans to spend it soon. You might consider a certificate ladder that matures in one-year increments:
A. $1000 in a 12 month certificate
B. $1000 in a 24 month certificate
C. $1000 in a three year certificate
D. $1000 in a four year certificate
E. $1000 in a five year certificate

At the time the 12 month certificate matures, buy a new five year certificate. When the 24 month matures, buy another five year, and so on. In five years, you’d have only the higher-yielding five year certificates in your ladder—and every year one of them will mature giving you access to the funds if you want it.

A share certificate is a savings vehicle that allows consumers to earn dividends over a set length of time (called the term) with little risk. During the term you cannot withdraw money without incurring a fee. The dividends earned during the term are called yield, or Annual Percentage Yield (APY). Term lengths vary and APY typically increase the longer the term. Common term lengths range from 6 months to 5 years. Share certificates at First Tech are insured by the National Credit Union Administration (NCUA) to at least $250,000. Sound familiar? Certificates of Deposits (CDs) are not offered by credit unions but are offered at banks. Both are similar solutions, as a long-term savings vehicles for consumers with little risk. Many banks are Federal Deposit Insurance Corporation (FDIC) insured to at least $250,000.

When rates change a bump-up certificate allows you an opportunity to increase the rate on your certificate; you may take one additional deposit for every 12 months completed of the current term or once per term for Bump Up Products. See complete disclosures and today's certificate rates.

We don't have a maximum balance amount for our Share Certificates, however we do have a $500 minimum opening deposit.

Note: All deposited funds with us are federally insured up to $250,000 by the National Credit Union Administration (NCUA).In addition, each Individual Retirement Account (IRA) account is insured separately by NCUA. Each IRA account is insured for up to at least $250,000.

If you're currently a member, you can open the account in Online Banking.

If you're not currently a member with us, we invite you to join us first.

Our Share Certificates are a great option if you're looking to lock-in higher rates without sacrificing safety. With terms ranging from six months to five years and the ability to lock-in a guaranteed rate, our certificates can be a great asset for those wanting to see their money grow without the fear of loss.