How to Structure Your Savings for Maximum Stability
Article submitted by Logan Amstutz, 3Rivers Shares Manager.
There’s been no shortage of discussion around interest rates lately—and for good reason. With the likelihood of Fed rate cuts growing stronger, it’s time to ask: How are you structuring your liquid funds at insured institutions?
High-Yield Savings Accounts (HYSAs) have dominated headlines and wallets over the past few years. But here’s the catch: most HYSAs are variable rate, meaning when the Fed drops rates, your earnings likely drop too.
If you haven’t considered Share Certificates (or Certificates of Deposit/CDs, as they’re known at banks) as part of your strategy, you might be leaving money on the table. Share Certificates offer fixed rates, locking in today’s yield for the entire term—even as rates fall.
Worried about access or penalties? There are some proven strategies that can help offset these concerns:
- Open Multiple Share Certificates: This is a smart way to manage your risk with maturity products. While you can access your funds by breaking your Share Certificate, by opening multiple Share Certificates, you can hopefully mitigate the hit to just those funds you need to access. This transitions well into the next strategy.
- Differing Opening Amounts: Instead of opening four Share Certificates of the same balance, open one large Share Certificate, two medium sized ones, and one small one. That way, if you only need to break the small Share Certificate, you’ll preserve the interest you’ve been earning on the larger ones. The mix of balances will be dependent upon your situation and where you think you might need that liquidity. And if you have some known expenses coming up, you’ve got the next strategy.
- Differing Terms: This is known as laddering, since the various terms can resemble the rungs of a ladder when you visualize them as lines on a graph. This allows for multiple benefits. First, by having some short term and some long-term Share Certificates, you position yourself better for whatever the rate environment looks like in the future. Today it looks like rates are likely on the way down, and in six months, the outlook could shift again. This can also be used to help you prepare for known expenses! If you know your property taxes are due in nine months, you might not want to lock those funds away for 12 months, but a six-month term, might be just right!
These are great strategies to consider regardless of where you do your banking. If you choose to grow your money with 3Rivers, we have two standout solutions with unique features that can help you stay confident, no matter which direction the Fed swings.
- 11-Month Safety Certificate: A strong option if you’re concerned about needing to access these funds in an emergency. You’ll lock in a fixed rate for 11 months, plus, after 30 days in the product, you can close it out entirely—penalty free! While it does have a slightly lower rate than our 12-Month Share certificate, should you need the funds and have to pay the penalty, you’d be paying more than that rate drop cost you!
- Any Purpose Savings Certificate: This is a great product for those who are looking to save more but struggle with the discipline. It has a variable term, which means you can choose any term from six months to two years. Remember that laddering we talked about earlier? This product is designed to help you set that structure up with ease. Plus, you can add funds into the account at any time. While it does have a penalty if you need to access the funds early, that penalty is typically discounted compared to other products of a similar term. And it has an attractive dividend rate significantly higher than the national average savings rate.
Want to explore which options and strategies are the best fit for you? We’re here and happy to help! Get in touch at 800.825.3641 or stop into your local 3Rivers branch today!
Financial wellness isn’t just about budgeting—it’s about strategic positioning. So, I’ll ask again:
How are you maximizing your liquid assets today? If Share Certificates aren’t part of your mix... what’s holding you back?
The information provided in this article is for educational and informational purposes only and should not be considered financial advice. Products and services referenced are offered by 3Rivers Federal Credit Union to eligible members and are subject to approval and applicable terms and conditions. Membership required.
Share Certificates are fixed-term deposit accounts and may be subject to early withdrawal penalties, which could reduce earnings. Partial withdrawals are not permitted; the certificate must generally be closed to access funds prior to maturity. In certain cases, promotional products may allow for exceptions, which are subject to specific product terms. Rates, annual percentage yields (APYs), terms, features, and conditions are subject to change at any time without notice. Actual earnings may vary depending on the amount deposited, the term selected, and applicable fees.
Any comparative statements (including references to “national averages”) are based on information believed to be accurate at the time of writing, but may not reflect current conditions and are not guaranteed. No guarantees are made regarding future interest rate environments, investment performance, or savings outcomes. Examples provided (such as laddering strategies or liquidity planning) are illustrative only and are not intended as a recommendation tailored to your personal financial situation.
Deposits are federally insured by the National Credit Union Administration (NCUA) to at least $250,000 per individual depositor. Please consult 3Rivers directly for current product details, applicable fees, and personalized guidance regarding your savings options.