Certificates: A simple way to lock in rates for a set term

A certificate is a savings option that lets you keep money in place for a set period of time ("term") while earning dividends at a fixed rate. At Redwood Credit Union, you can choose from different terms and options to fit the way you save. (At banks, certificates are often called "certificates of deposit" or "CDs.")

Certificates can be a good option when you want to lock in a rate with funds you won’t need to use right away. The details matter, though, because opening a certificate, keeping the advertised rate, and taking money out early all come with specific rules at different financial institutions. Learn how certificates work at RCU and what to know before you open one.

How certificates work

A certificate works by having you deposit money for a set term, which makes it less flexible than a regular savings account. In return, you earn dividends at a fixed rate for the full term, so you know what to expect and can plan on your earnings.

At Redwood Credit Union, certificate terms range from 3 months up to 5 years. That gives you options if you want to save for a shorter goal or keep funds set aside longer. It’s important to understand that rates may vary depending on the length of the term.

Certificates are designed for money you don’t need to move often. If you need more day-to-day access, a regular savings account or money market account may be a better fit for those funds.

What certificate options can you choose at Redwood Credit Union?

RCU offers several certificate options, depending on how you want your savings to work. First, you choose how long to keep your funds in the certificate. Then you can select from flexible features: RCU offers one-time rate bump-up or funds add-on options, but you must request these when you open or renew your certificate.^*

Here is how those options differ:

Option	What it means
Term choices	You can choose a certificate term from 3 months up to 5 years.
Bump-up option	You can take advantage of a higher rate one time if it becomes available during your certificate term.
Add-on option	You can add $500 or more any time during the certificate term.

If you need help deciding which option best fits your goals, we can help.

What do you need to open a certificate and earn the highest advertised rates?

You need a $1,000 minimum deposit and an active checking account at Redwood Credit Union to open, obtain, and maintain the highest advertised rates.

Active checking means three or more transactions per month, excluding 24-hour telephone teller, fees, or dividend posting transactions. If you are planning to open a certificate, it helps to review your checking activity so you know whether your account meets that requirement.

Because rates can change, always check the savings certificates page for the current rates and latest special offers before you open an account.

Are there penalties for taking money out early?

When you open a certificate, you agree not to access the funds until the certificate’s term ends. An early withdrawal may be subject to a penalty. The penalty depends on how long the certificate has been open and the length of the certificate term. For specific penalty details, refer to RCU’s Certificate Truth in Savings Account Disclosures.

These rules matter most if you may need access to the money soon. If there is any chance you will need the funds before the certificate term ends, you may want to keep those savings in a more flexible account like a money market.

What are the benefits of a certificate?

A certificate can help you save with a fixed rate and a set end date, which makes your earnings easier to predict. That can work well when you’re saving toward a goal and want your money to stay in place.

RCU’s rate bump-up and funds add-on options can give you more flexibility within the certificate term. If rates increase during your certificate term, you could use the one-time bump-up option to take advantage of the higher rate. Or, if you end up with additional funds you can set aside, you could use the add-on option to increase your certificate balance and earn more dividends. Just remember: You need to opt in for these features when you open your account—you can’t choose them later.

Certificates aren’t meant for all of your money. They’re a good fit for funds you can set aside for the full term and don’t need to access day to day.

What should you do next?

If you’re comparing savings options, start with RCU’s savings certificates page so you can review current certificate offers, rates, and requirements. A certificate can be a useful way to set money aside for a fixed term, especially when you want predictable earnings and are comfortable leaving the funds in place until maturity.

Redwood Credit Union is a not-for-profit, Member-owned financial cooperative, and our focus is on serving our Members, not outside shareholders. We’re here to help you achieve your financial goals, and we love to help you succeed. If you would like help choosing a certificate or understanding the requirements, please contact us. We’ll be happy to help you with next steps.

^*Add-on option and one-time optional rate bump-up option must be added at the time of certificate opening and may reduce initial rate, which will be disclosed to you at the time of selection. Feature(s) only available during current term of certificate. APY = Annual Percentage Yield.