12-month Certificates are suddenly popular again.
So what's driving this mini-resurgence? American consumers are looking at short-term certificates in a different light. They're thinking of them not as investments, but as emergency funds. As "Break-in-Case-of-Emergency" certificates if you will.
That's because like glass fire extinguishers cases, you only break one for real emergencies.
By definition, an emergency fund is money you set aside to help when the unexpected happens, like a job layoff or unanticipated expenses. You hope an emergency won't happen, but you know it's important to be ready.
Emergency funds need to be liquid so you can access them when necessary. But rates on regular savings accounts, where most people park their funds, are generally much lower than Certificates. This is where a short-term Certificate comes in — you earn a better rate on your emergency funds, but the term can be broken so you can access your funds, if needed.
You should know there are penalties for early withdrawal — typically the loss of dividends you would have earned. But that may be worth the risk, and knowing that makes you think twice before breaking it.
For peace of mind, consider building a Certificate equal to three or six months of your monthly expenses such as mortgage/rent, health insurance premium, and loan payments. If nothing urgent comes up in that time, you can open another Certificate and let the funds grow steadily.
If you'd like to earn more on your emergency cash funds, but still keep them accessible, check out our competitive yields on 24-month (2.50% APY*) and 5-year (3.00% APY*) certificates.
*APY = Annual Percentage Yield effective as of 10/25/2018 and is subject to change. Membership in USCCU required. Must qualify for USCCU membership and membership fee may apply; please call (877-670-5860) or visit www.USCCreditUnion.org to confirm eligibility. Minimum deposit of $1,000 required to open the account and must be maintained daily to obtain the APY. The account will be closed and an early withdrawal penalty will apply if the account balance is reduced below the minimum daily balance. Please refer to Account Agreement and Truth-In-Savings Disclosure for early withdrawal penalty. Dividends will not be earned if the account is closed before the dividends are credited by the ending date of each month. The promotion of share certificate does not apply on Individual Retirement Accounts (IRAs). All credit union account programs, rates, terms and conditions are subject to change without notice.