Rising interest rates draw attention because it costs more for consumers to borrow money, but the flip side of that is people have the potential to earn more on their savings.
Rates and products are different at each financial institution. Some have increased their yields on checking and savings accounts, while others now offer more attractive rates on certificates of deposit.
Jeremy Blair, VP Finance at Mountain America Credit Union (MACU), says they for example, have a limited-time offer for 18-month certificate accounts earning a 4% annual percentage yield, which is the highest rate they've offered in years.
There is also a 60-month certificate earning 3.75% APY.
Both of those include a one-time rate bump option to allow members to boost their earnings if the credit union offers a higher rate in the future.
That can be opened in a branch or online at MACU.com.
We asked Blair to explain whether a certificate or savings account is better for you.
He said, " It depends on what you want. For those who want more liquidity to be able to use those savings regularly, that's going to favor a savings account. But if you have enough liquid savings and are looking to earn a little more to help offset inflation, a certificate account is another option."
There are also differences in certificates. You choose a length of time you want to leave the money in the certificate, or the term. You can get your money out earlier than the term, but you will typically have some penalty for doing so.
Blair went on to say, "Other than term, there are two types of certificates I'd like to address. The first is a standard certificate. With that, you put in a certain amount of money and leave it there for the length or term of the certificate. Depending on your institution, the money will either earn the same fixed rate you signed up for, or you may be able to purchase an option like the one Mountain America offers, where for a slightly lower initial rate you get a one-time option to bump up your certificate's rate if the institution's offered certificate rate increases. As I mentioned earlier, some of our special-offer certificates include that bump option in the rate already."
The second type of certificate is the flexible or growth certificate. Because it varies by bank or credit union, you'll want to do research. With the growth certificate you don't have to put all the money in up front. Instead, you put what you want in the beginning and lock in that rate. Down the road you can continue to add money - up to a maximum limit - to increase your earnings. You may not necessarily get the option to take a rate bump, but you also don't have to put in as much up front and can grow your savings along the way.
You can learn more by visiting your MACU branch or by visiting macu.com/must-reads.
