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What Is a Share Certificate? Is It Similar to a CD?

August 23, 2023

You’ve likely heard of bank CDs, or certificates of deposit, but you might not be as familiar with share certificates, a similar type of savings account offered by credit unions. Don’t worry! These products are very similar, both offering a reliable and very safe way to grow savings.

Let’s take a closer look at what share certificates are, how they work, and what distinguishes them from certificates of deposit. We’ll also discuss who should consider investing in CDs and when it makes the most sense to do so.


A share certificate is what is known as a term deposit account, meaning you invest money just as you would in a savings account, but you agree to leave this money alone for a set period.

In return for having your money “on call” for this time, your credit union agrees to pay a guaranteed return on your investment at regular intervals until the certificate “matures” at the end of the period.

In this respect, share certificates are identical to certificates of deposits (CDs) offered by banks:

  • Both allow you to safely invest a relatively small lump sum (often as little as $500) over any period between three months and five years.
  • Both allow you to benefit from regular dividend payments over this period, with higher payments for longer-term certificates.
  • Both put your money to work with almost no risk, at the same level of federal protection for your investment as money in a regular savings account.

That said, there are some small but important differences between share certificates and CDs that you ought to know about.


The separate names and slightly different terminology that banks and credit unions use to talk about what is essentially the same type of product really has to do with the different ownership of these two types of financial institutions.

  • Banks are for-profit companies owned by their shareholders. While banks deliver services to customers, they are also expected to make a profit on these services in order to pay regular dividend payments to shareholders.
  • Credit unions are not-for-profit cooperatives owned collectively by the members who hold accounts there. Services are provided for the benefit of members themselves and any profits made from investments are returned directly to the members as dividends.

As a result, credit unions are often able to offer lower-cost services than banks, and the gains from investments are distributed differently than banks.

Interest vs. Dividends

While both CDs and share certificates allow you to earn returns on your investment at fixed intervals (usually monthly) for their full term, banks do this as an interest payment.

This is because you are being paid only a portion of what your money has earned the bank, with some of the profits going toward dividend payments and administrative expenses.

As a member of a credit union, the return on your investment is shared as a dividend payment with all other members who invested in the same product.

Because you effectively co-own the credit union along with the other members, there is no need to separate your earnings from those of the financial institution itself, although the credit union may deduct administrative and other expenses from what is passed on to members.

While interest and dividend payments are essentially the same things, credit unions’ nonprofit status often means they are free to pass on more earnings to members in the form of better rates on their share certificates.


The only other notable difference between CDs and share certificates lies in the way these funds are insured by regulators to protect investors.

Both CDs and share certificates are among the safest investments you can make because your funds are guaranteed by the federal government in exactly the same way as money in any other type of savings account is in the event of the collapse of your bank or credit union.

However, financial industry regulations require that funds deposited at banks and credit unions be backed by separate institutions, namely the Federal Deposit Insurance Corporation (FDIC) in the case of banks and the National Credit Union Administration (NCUA) for credit unions.

Both institutions guarantee the safety of funds up to the value of $250,000 for money in any savings account, including CDs and share certificates.


Share Certificates vs. CDs

Share Certificates


Offered at: Credit Unions Banks
Earnings paid as: Dividends Interest
Insured by: NCUA FDIC



Now that we understand the differences between share certificates and CDs, let’s take a closer look at how share certificates actually work.

Rates and Terms

Share certificates are popular investments because they offer higher rates of return on your money than cash invested in regular savings accounts.

While rates are still usually lower than potential returns on stocks, bonds, or mutual funds— unlike these investments—returns on a share certificate are guaranteed and your principal is backed by federal deposit insurance.

Terms for share certificate accounts generally vary from 6 to 60 months.

Minimum Balance

Share certificates are designed to allow you to grow a cash lump sum into a larger amount over time. For this reason, the minimum deposit to open an account is larger than most conventional savings accounts.

Most credit unions allow you to open a share certificate with an initial minimum deposit of $500. Lower opening deposits may be available, so be sure to check your options first.


Unlike regular savings accounts or checking accounts, share certificates generally charge no fees to open or maintain an account.

However, most credit unions will charge a withdrawal penalty fee or will even suspend any dividend payments if you “break” your certificate by accessing your principal investment earlier than the agreed-upon term.

Dividend Payments

Depending on your credit union, you might have the option to receive dividend payments directly into a regular account or to have them reinvested with your principal so you can earn compounding interest on future payments.

Most people are looking to maximize the growth of their investment, so they choose this option.

And, while you are free to cash your principal and earnings on maturity, many share certificates allow you to automatically reinvest money so you can continue to build your savings over time.


Share certificates are among the safest investments you can make, allowing your money to earn more dividends than it would in a conventional savings account, while still enjoying the same level of insurance from the federal government — up to $250,000 per account.

What’s more, a share certificate also guarantees you a predictable return on your investment. You’ll know exactly how much your nest egg will earn and when you will get it, with almost no risk of losing your principal or earnings.


Share certificates are easy to open at almost any credit union and offer a safe, predictable, and hassle-free way to grow any sized lump sum into a significant nest egg.

That makes them a great place to stash any cash that you can afford to be without for six months or more.

It’s also a great choice if you’re ready to make your hard-earned money start working for you. A share certificate offers guaranteed returns on a schedule, so you can plan ahead for purchases or savings goals.


The sooner the better if you have a small lump sum saved or a little extra money on hand. Let’s take a look at some popular ways to put a share certificate to work.

1. Saving for a Goal

If you’re a recent grad or a young couple looking to save up for a new car or a dream vacation, a share certificate offers a safe, sensible way to start saving the money you can afford to set aside now from your budget to use later on that big purchase.

Choose a term that works for you and consider a flexible product like Fibre Federal Credit Union’s Money Builder Certificate, which allows you to continue adding money to your account throughout its term while still earning great dividends.

2. Building Wealth

Starting to save for big, long-term goals like a college education or retirement can be tough. A share certificate offers a convenient way to start setting money aside without committing to a dedicated retirement or college savings fund.

Start by investing the money you have available in a single share certificate. When it matures, add in any additional funds you’ve saved and reinvest it, ideally in a longer-term certificate. Then let compound interest go to work to start building you a more secure future.

Some institutions, like Fibre Federal, also offer dedicated IRA certificates to help you plan for retirement without the possibility of risking your retirement savings in the stock market.

3. Investing for a Child or Grandchild

Want to give your child or grandchild a gift that keeps giving, and maybe a valuable life lesson in the power of compound interest and the benefits of savings?

Consider investing a small amount in a share certificate to mark a birth or significant birthday, then allow the money and its earnings to be reinvested until the child reaches financial independence.

Choose a product like Fibre Federal’s competitive and flexible Savings Certificates. Over time, your small gift will turn into a significant contribution to a young person’s financial future!

4. Protecting a Nest Egg

Say you have a significant amount of money on hand that you’re not ready to spend or invest. While your money may be safely stored in a regular savings or money market account, rising inflation can mean your accumulated cash will buy you less each month.

A share certificate offers a safe and convenient way to “hedge” your money against inflation, allowing you to limit the erosion of its value over time.

And, if you choose an adjustable rate product like Fibre Federal’s Bump Up Certificate, you can add inflation-beating power to your portfolio if rates rise!


Think that a share certificate won’t pay the kind of dividends you need to really grow your savings? Take a look at the rates Fibre Federal offers members on our wide range of share certificate offerings.

Choose from a variety of flexible certificates designed to match your individual savings needs including our Savings, Money Builder, and Bump Up products as well as specialized retirement options. Then choose a term that maximizes your returns while matching your savings goals.

In every case, you’ll get the built-in safety, reliability, and predictability you expect from a share certificate with flexibility and earning power that might surprise you. Click below to learn more.

See Our Share Certificate Options

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