Typically you can receive higher crediting rates on a Share Certificate if you commit to leaving your money with the financial institution for a longer period of time. This lack of liquidity causes many people to choose shorter-term Share Certificates at the expense of receiving the higher dividend rates. Share Certificate laddering is a strategy that gives you the benefit of receiving the higher dividend crediting rates of longer term Share Certificates but still provide you with some liquidity. For example, rather than deposit $60,000 for a one-year period and renewing each year at a lower one-year rate, you could create a three-year ladder and put $20,000 in a one-year Share Certificate, $20,000 in a two-year Share Certificate and $20,000 in a three-year Share Certificate at the higher dividend rates. After the first year, you take the one-year Share Certificate and purchase a new three-year Share Certificate. After the second year, you take the initial two-year Share Certificate and purchase a new three-year Share Certificate, and do the same with the initial three-year Share Certificate. Starting in year four, you will have the three Share Certificates receiving the benefit of a three year rate but also have access to 1/3 of your money each year without penalty should you need it. Use this calculator to determine the additional dividends you could earn with a Share Certificate laddering strategy.
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