If your term account is poised to reach maturity in the near future, a great option for continuing low risk, high-interest growth, is a rollover. A rollover is process (oftentimes automatic) that transfers (or, “rolls over”) your funds—including the initial deposit and any dividends earned—into a new term account.
Benefits Offered by Term Accounts
If you already have a term account, you know that they allow you to grow your money at a rate generally higher than you would receive in a savings account, and are an attractive and stable short- and long-term growth opportunity, especially during periods of uncertainty, or when the market experiences large fluctuations. They can help finance goals such as: a down payment on a home, kitchen renovations, or a family vacation.
You also know that if you access these funds before maturity (or the date that the funds in your term account are available for your use), you incur a financial penalty that can be equivalent to several months’ accumulated interest. While some financial institutions will allow you to withdraw accrued interest before your term account matures (simply contact Quorum Member Services at (800) 874-5544 to request access to accrued dividends), doing so will cause you to lose the benefit of compound interest (quite simply, the interest you earn on interest) and ultimately, higher earnings.
Roll Over Your Maturing Term Account to Avoid Market Volatility
As you near your term account maturity period, consider the benefits of a rollover. When money markets experience volatility, rolling your maturing term account over allows you to lock in a competitive rate, even if federal interest rates fall during the term.
Before your term account reaches maturity, be sure you understand any changes to the term and interest rate. Also understand if your financial institution initiates the rollover automatically, or, for example, if funds are deposited into a basic savings accounts (Quorum maturing terms automatically roll over into the same term (for standard terms) or the closest standard term rounded up (for promotion terms) with the dividend rate in effect at the time of maturity). It is also helpful to ensure your financial growth strategies are well-positioned to meet your needs. Review your short- and long-term financial growth goals, current interest rates and future trends, the amount of risk you can afford, and whether or not you may need liquid assets in the near term.
And speaking of needing access to funds…
Consider Laddering Term Accounts for Ultimate Flexibility
In addition to rolling over the funds in your current account, you may also want to consider future account structuring via a term “ladder.” Laddering is a savings strategy in which you establish multiple accounts—each with different terms—so that you earn the higher rates associated with term accounts, yet always have access to some of your funds.
For example, you could purchase five separate term accounts at $10,000 each instead of one for $50,000. You could then break the accounts down into the following ladder construct each with a different term:
- #1 Term Account: $10,000 for a one-year term
- #2 Term Account: $10,000 for a two-year term
- #3 Term Account: $10,000 for a three-year term
- #4 Term Account: $10,000 for a four-year term
- #5 Term Account: $10,000 for a five-year term
As each term matures in your ladder, you can choose to roll it over to continue earning dividends, or access your cash, if needed. If interest rates started to rise as your term account neared maturity, you could cash it in and purchase a higher interest term to add to your ladder. Conversely, if interest rates fell, you would still have your five-year term account locked in at a higher rate at the end of your ladder.
Have a Maturing Quorum Term Account?
If you’ve received notice that your Quorum term account is nearing maturity: Funds will be automatically rolled over into the same term (for standard terms), or the closest standard term rounded up (for promotional terms) with the dividend rate in effect at the time of maturity. (At maturity, you will have seven calendar days to decide whether to let it roll over, re-invest it, or withdraw it.)
- If you would like your account to roll over, you’re all set! No action is necessary.
- If you do not want your account to roll over, call Quorum at (800) 874-5544 prior to the maturity date to discuss available options.
Quorum offers for you
Cozy up with some good savings,
There's no better time to start saving for the future. Open a term account today and start enjoying rates up to 1.35% APY*.
2020: The Year of the Saver
Turn that little something into "something, something" with our high-yield liquid savings account.
Here, there, anywhere banking.
Our online and mobile banking platforms make it simple to manage your money at your convenience. Log in at quorumfcu.org or download our mobile banking app today.
No more checking around.
Your search stops here. Enjoy the convenience of a FREE nationwide ATM network, online and mobile banking, online bill pay and a Debit Mastercard®.