A savings certificate is similar to a certificate of deposit (CD) that you might receive from a traditional bank. It’s just offered by a credit union instead. If you’re seeking a safe, guaranteed-return on investment for a sizeable sum of cash, a jumbo savings certificate might be just what you’re looking for.
Jumbo savings certificates work much like regular savings certificates but have higher minimum deposit requirements and typically deliver a higher dividend rate. Unlike funds in a traditional savings or checking account, which can be typically withdrawn at any time, funds in a jumbo savings certificate, as with a regular savings certificate, should stay put for a set period of time. This is called the “term,” which typically ranges from three months to five years.
Once your jumbo savings certificate reaches the end of its term, called the “maturity date,” you may redeem it for the amount you originally invested, plus its guaranteed dividend rate. Or, you can use the funds from a mature savings certificate to open an entirely new one with a new fixed term. Note that withdrawing funds from any savings certificate before its maturity date may incur an early-withdrawal penalty.
While most jumbo savings certificates start at a minimum investment of $100,000, some financial institutions (including Advancial) make them available for a much lower dollar amount to make them available to a wide array of people. Despite their large investment size, jumbo savings certificates are considered a risk-free investment, as they’re federally insured up to $250,000 per person, per institution, per ownership category.
When to Consider a Jumbo Savings Certificate?
Because they offer a guaranteed return when held to maturity, jumbo savings certificates are most appropriate for those preferring a low-risk and/or fixed-term investment. For example, if you’re retired or soon will be, you may wish to put some if not most of your funds in low-risk investments. Or, if you’re trying to save for a future major expense by a certain date, such as for the down payment on a new home in two years, a jumbo savings certificate might be a good fit if you can afford to keep your down payment funds untouched until maturity.
Funding for a jumbo savings certificate can come from a variety of sources, such as:
Choosing a Jumbo Savings Certificate
- Proceeds or profit from a large sale, such as property or a vehicle
- A workplace bonus
- A sizeable investment return you wish to “lock in”
- A large balance in a savings or checking account
- Insurance claim proceeds
- An unexpected inheritance
- Lottery, sweepstakes or gambling proceeds
When trying to choose a jumbo savings certificate that is most appropriate for you and your goals, you’ll want to consider both the rate of return and its term. Dividend rates are typically higher on jumbo savings certificates that have a longer term. While it may be appealing to invest in a savings certificate with a higher dividend rate in order to maximize your return, you’ll want to ensure that the maturity date is within your desired time frame. Your financial institution should be able to help you with your selection.
Before investing in any jumbo savings certificate, review all of the documentation to ensure that you fully understand the dividend rate you’ll earn, how it is compounded and credited to your account and any early-withdrawal penalties for removing funds before maturity. Know both the fixed dividend rate and annual percentage yield (APY). An APY is an annualized rate that reflects the estimated earnings based on the fixed rate of return and frequency of compounding.
Jumbo Savings Certificates from Advancial
When compared with the jumbo CDs offered by banks, Advancial is among the nation’s leading providers of jumbo savings certificates. This is based on Advancial’s industry-leading rates of return and favorable investment minimums across an array of terms, ranging from three months to five years.
Advancial offers both jumbo savings certificates, with a minimum investment of $50,000, and junior jumbo savings certificates, with a minimum investment of $25,000. Regardless of size, all of Advancial’s jumbo savings certificates are available within regular accounts, individual retirement accounts (IRAs) and business accounts.
To learn more about jumbo savings certificates from Advancial, click here
or stop by your local Advancial branch