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By: AgFed Credit Union

Welcome to AgFed Credit Union's MoneyDig blog! 

Get confident about your personal finances with a number of articles, tips, advice and more.


Grow Your Tax Refund with a Certificate

 Mar 04, 2024
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As tax season rolls in, many people are looking forward to receiving a refund check. You might already have an idea of how you plan to spend it. But, while it can be fun to treat yourself, you also don’t want to lose sight of the many ways these funds can benefit you.

A tax refund can feel like a bonus, but it’s truly your money being given back to you by the government. Finding ways to use these funds to improve your financial situation should be a top priority. One such choice is to kickstart your savings journey by investing a portion of your refund into a certificate account.


How Certificates Work

A certificate is a secure savings instrument offered by financial institutions, like the credit union. You deposit a specific amount of money for a set period (usually between 6 months and 5 years), during which time your funds earn dividends or interest at a fixed rate. When you open the account, you can select the term that works best for you and your financial goals.

The Benefits of Certificate Accounts

  • Dependable: Certificates are known for their predictability and dependability, classifying them as a safe investment option - and an attractive choice for risk-averse savers. You’ll earn guaranteed returns that are not dependent on the current market, which tends to fluctuate.
  • Fixed Structure: The set-term and fixed-rate structure of certificates instills disciplined saving practices. Knowing that your funds are committed to growing for a set time deters making impulsive withdrawals. This way, you can allow your funds to mature to their maximum earning potential.
  • Secure: One of the biggest advantages of certificates is the security they offer. Just like your other accounts at the credit union, certificates are NCUA-insured up to $250,000.* Since your funds are protected, this makes certificates a no-risk investment option. You can enjoy peace of mind knowing that your investment is safe, regardless of market fluctuations.
  • Higher Returns: Certificates tend to offer higher dividend or interest rates than traditional savings accounts. By locking in your funds for a set period, you can capitalize on these elevated yields, thus allowing your money to grow substantially more than it would in a standard savings account. These earnings will compound and significantly boost your savings over time.

Ways to Use Your Tax Refund with a Certificate

  • Boost Your Emergency Fund

A robust savings plan is a crucial component to achieving financial stability. Maintaining adequate savings ensures you have a safety net to ease the blow of unexpected expenses by providing a financial buffer. Your savings are there to offer peace of mind in the face of emergencies like medical bills or car repairs. Putting your tax refund into a high-earning certificate account to maximize your yields can ensure funds are available when needed.

To capitalize on this strategy, consider laddering your certificates. This strategy involves opening several certificates at varying terms. For example, instead of investing $5,000 into a 2-year certificate, your investments might be:

  • $1,500 in a 6-Month Certificate
  • $1,500 in a 12-Month Certificate
  • $2,000 in a 24-Month Certificate


This way, you always have funds coming due – allowing you to access the money in an emergency without any early withdrawal penalties.

  • Plan for Future Goals

Having sufficient savings plays a pivotal role in ensuring you can achieve your long-term financial goals. Whether you’re saving to buy a home, start your own business, or plan for retirement, your savings accounts help you accumulate the necessary funds to turn your goals into reality. By placing your tax refund into a certificate account, your savings will earn more and put you closer to achieving your financial goals.

Additional Thoughts

  • Consider Your Long-Term Financial Goals

When using your tax return to open a certificate, aligning your savings strategy with your long-term financial goals is essential. Consider the duration of the certificate term based on when you anticipate needing the funds. Doing so will ensure that your savings plan complements your broader financial objectives.

  • Diversify Your Savings Strategies

You’ve heard the phrase, “Don’t put all your eggs in one basket.” The same principle applies to saving and investing. While certificates offer security, stability, and higher earning yields, it’s necessary to include other investment vehicles in your long-term savings strategy. Diversification ensures a well-rounded financial plan and enhances the resilience of your overall portfolio.

We’re Here to Help!

Investing a portion of your tax refund into a certificate account can be a wise strategic move for your financial future. Between the security, stability, and higher savings yields of certificates, your savings plan is sure to benefit.

If you want to learn more about certificates or are ready to open your account, we’re here to help. Give us a call or visit our Certificates page to view rates and terms.


* The NCUA is the independent federal agency that administers the National Credit Union Share Insurance Fund. Credit Unions that are federally insured by NCUA offer a safe place for you to save money, with deposits insured up to $250,000 per individual depositor. Visit for additional information.

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