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Kellogg Community Credit Union
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money saving strategy

With interest rates so low, getting the most out of your savings can be a challenge. So how do you earn money from your savings without tying it up for years? Opening multiple certificate accounts is a great strategy!

What’s a certificate?

Certificates are like a savings account except with certificates you cannot withdraw the money for a certain period of time. In return for agreeing to keep your money in a certificate account for a longer period of time, your financial institution pays you a higher rate of return.

How do I start this strategy?

The certificate saving strategy is a simple concept: divide the amount of money you have to save among certificates that mature at different intervals. As each certificate matures you can turn it over into a longer maturity certificate. In time, all your certificates will be earning a higher yield with a longer maturity. Because you have a certificate maturing regularly, you can always cash it in when you need money.

A beginner’s certificate strategy

A common approach to implement this strategy would be as follows: If you have $1,500 to invest, deposit $500 into a one, two, and three-year certificate. Each year when a certificate matures roll the principle ($500) plus the dividends (interest made over the year, which varies depending on the interest rate) into a three-year certificate for a higher-dividend yield. Continue each year as your certificates mature, and reinvest them into a three-year certificate so all your money is earning a three-year rate.

If you’re starting with less you could invest smaller amounts using a 3, 6, 12, or a 12, 18, 24 - month strategy. Again, the same principles apply, as each certificate matures, reinvest it for a longer term until all of your money is earning the highest rate. Kellogg Community Credit Union (KCCU) has an 18 month certificate special which would help you get started with this money saving strategy.

To start your money saving strategy and open your certificate accounts, you can call 269.968.9251 and ask to speak with a KCCU Member Service Representative. They will be happy to get you started!