Share Certificates

These two savings tools are the same, except they’re provided by different types of financial institutions. Credit unions often use the name Share Certificates because our members are part-owners who each own a share of the credit union. Certificate of Deposit is the common name for this product from a bank.

Credit unions can pass revenue back to members in the form of higher rates on deposits, lower rates on loans, and reduced fees. Banks are usually accountable to outside stockholders.

CDs and Share Certificates offer several advantages over regular savings accounts, money markets, and even IRAs. Here’s what you need to know:

• They often earn higher certificate rates than other savings tools, especially if you choose a longer term or take advantage of any special promotions.
• Their term and early withdrawal penalty provide a good incentive for you to save and achieve your goals, whereas other high-interest accounts like Money Markets let you withdraw funds easily.
• Compared to individual retirement accounts (IRAs), you can access your funds sooner and you get to choose when you access your funds, whereas IRAs tend to have more restrictions on withdrawals.

Like other credit union deposit accounts, you can relax knowing your certificate funds are insured by the National Credit Union Administration (NCUA) up to $250,000.

When choosing your certificate term, consider when you want to access your funds and any other reasons why you might need the money. Here are a few tips and tricks to help you get started:

• Longer terms generally earn higher rates, but check if there are any promotional certificates offering great rates on certain terms for a limited time.
• Before you sign up for a long term, make sure you have another source of emergency funds so you won’t need to access your share certificate before the maturity date.
• If you have enough money to make multiple opening deposits, consider a share certificate ladder strategy and open a short term, medium term, and long term certificate so you can enjoy the benefits of each one.

The end of your term is known as the maturity date. When your certificate matures, you have a few options:

• Withdraw your funds to spend as planned.
• Transfer your funds to another type of savings or investment account.
• Reinvest your funds in another Certificate Account, and ideally one with a higher rate.

You will likely receive a notification that your term is ending and if you choose to do nothing, your funds may be automatically reinvested in a certificate with the same term as you currently have.