Similar to Savings and Money Market Accounts (MMAs), Term Certificates are federally insured by NCUA up to $250,000. Where they differ is in the accessibility of the funds.
Savings and MMAs allow you to deposit or withdraw funds at any time. Term Certificates are timed accounts, meaning the funds on deposit are not available for a specified length of time.1 The upside is it yields higher rate that’s fixed for the duration of the term.
One of the key benefits of Term Certificates is laddering. Before you head to the hardware store, let us explain. Laddering is when you divide your initial investment into equal parts and deposit each portion into a separate Term Certificate so that one matures every year. That way, you can take advantage of longer terms (and therefore higher interest rates) while still having access to some of your money each year.2