Fixed Rate Certificates

Fixed-rate certificates of deposit are a type of savings account that offer fixed interest rates for a term, periods which may vary from a few months to a few years. The point of a certificate, or CD, is to make a lump-sum deposit, leave it alone and then let the amount of money you place accrue interest for the certificate term. Compared to other types of savings accounts and savings programs, certificates generally have much higher interest rates, thereby allowing you to build wealth faster. Additionally, certificates benefit from compound interest, meaning that interest builds on the initial deposit as well as any interest that has already been accrued.

How to Find the Best Certificate Rates in Long Island

Are you looking to find the best certificate rates in Long Island? It’s important to look beyond just the interest rate, but consider the term, yield and any withdrawal penalties when making your choice.

Choosing the Right Certificate Term

The certificate term is simply the period that your certificate is accruing the designated interest rate. This term can span anywhere from a few months to a few years. Some certificate terms are only for three months, while others can last up to 84 months.

It’s important to keep a few things in mind when selecting terms. One, you’re only going to build your wealth if you leave the lump sum of money that you deposit untouched, so consider how long you can commit your funds – and what amount you can commit – without requiring access.

Additionally, it’s important to consider the interest rate when selecting the right certificate for you. Shorter terms tend to provide more flexibility, while longer-term certificates can provide higher yields.

Selecting the Best Yield

Yield is defined as the amount of money you’re able to earn from an investment over a term, often listed as a percentage of the overall investment cost, or annual percentage yield (APY). Generally speaking, the certificate with the higher APY is going to maximize returns. However, it’s also important to consider compounding frequency, or how often interest is compounded. This may be done daily, monthly or even annually in some cases. Typically, the more compounding periods, the better it is for your return.

Consider Withdrawal Penalties

When you place money into a certificate, you’ll want to keep it there for the term for it to maximize growth. However, things can happen – and you may need access to these funds for one reason or another. If this happens, you may be subject to an early withdrawal penalty, which is often forfeited interest. Make sure you understand any potential penalties. It’s also best practice to plan for the potential of any emergency by building up a rainy day fund you can use to avoid taking money from your certificate before term. You could potentially put your money in a no penalty CD, like that offered by Marcus by Goldman Sachs, but be sure to do proper research into this option to make sure it works for your specific situation. No penalty CDs make it so that you don’t have to pay any early withdrawal fees, but require you to withdraw the full amount as a general rule.

Short-term vs. Long-term Certificates

There are both short-term and long-term certificates, with terms ranging anywhere from a few months to a few years. There are both pros and cons to each type of certificate.

For instance, short-term certificates tend to have higher interest rates and also allow you to access your funds again sooner. Plus, there’s always the option to renew your certificate after the term has expired. However, interest rates can vary if you opt to renew.

Long-term certificates are ideal for building wealth over several years and can lock in a fixed interest rate, which can be a wise strategy in a volatile market. Additionally, interest rates – even for long-term certificates – are favorable right now. The biggest disadvantage to a long-term certificate is that there’s a longer period you won’t have access to your money, unless you want to risk an early withdrawal penalty.

How to Compare CD or Certificate Rates in New York

It’s only natural to want to get the best rate on your CD or certificate – and this is fairly easy to do with some shopping around. You can shop both national banks and local credit unions, but know that local credit unions typically have more personalized service and more favorable rates for their members. Island Federal is no exception and offers competitive CD and Certificate rates.

In addition to shopping around for the best APY, also consider looking for special promotions that can boost your returns, even if it’s only for a certain period of the term.

Benefits of Choosing a Certificate in Long Island

If you’re a Long Island resident, there are benefits to choosing a certificate in the area beyond just growing your portfolio. For instance, you’re also investing in the area when you choose a certificate, which helps support the community and the local economy. When you work with a local credit union, like Island Federal, you’ll also receive more personalized and tailored financial advice and service.

Tax Advantages for Long Island Residents

There are also various tax incentives that Long Island residents can take advantage of. For example, some interest on earnings may be exempt from New York state tax and there’s also the potential for tax-deferred growth options. Make sure you work with your financial institution to fully understand any tax benefits.

Security of Certificate Investments in the Local Market

Investors can also rest assured that their investment is secure. CD and certificate investments are federally insured by the FDIC or NCUA up to $250,000. Long Island banks and credit unions are also well-regulated and able to offer a stable investment environment.