Certificate Accounts and IRAs
BayFed has several options for certificate and other long-term deposit accounts.
Certificate Accounts
A certificate is a savings account that generally earns a higher rate of interest than a regular savings account in exchange for your promise to keep the money in the account for a pre-determined period of time (term). The longer the term, the more interest you are likely to earn.
- Open a certificate for as little as $1,000, choose a term between three months and five years, and you are guaranteed to earn the corresponding interest rate until the term expires.
- At the end of the term, you can renew your certificate for the current interest rate offered at that time, choose a different term and interest rate, or move your money into another account.
- Avoid withdrawing money from your certificate before the term is over or you could be charged a substantial penalty.
Individual Retirement Accounts
It's never too early to start saving for your future with an IRA! We offer Traditional, SEP, and Roth IRAs, as well as Coverdell Education Savings Accounts. Visit any Bay Federal branch to start saving for your retirement today!
What is Certificate Laddering?
“Certificate laddering" is a strategy that can help you earn higher interest rates without tying up all of your money in one, long-term investment. Here is an example of how to set up a two-year certificate "ladder,"
- Divide the amount you have to invest into two or more certificates with different terms. For example, if you have $10,000 to invest, you might invest $2,500 each into four certificates with terms of six months, one year, 18 months, and two years.
- As each certificate “matures,” roll the funds into a new, two-year certificate.
- You can also structure your certificate ladder with longer terms of up to five years to earn a higher interest rate.
The Advantages of Certificate Laddering
Certificate Laddering provides two advantages:
- With one certificate maturing every 6 months, you will be able to withdraw money twice a year without a penalty.
- If you continue to purchase a 2-year certificate each time one comes due, you will earn a more consistent return on your savings. If rates climb, you can invest your money at the higher rate. If rates decline, only a portion of your money will earn at the lower rate.
Try our Certificate Laddering Calculator to see how this strategy can maximize your investment returns!