Share Certificate
What Is a Share Certificate?
A share certificate is the credit union equivalent of a certificate of deposit (CD). It is a savings product that pays a fixed interest rate when members agree to keep their money deposited for a specific period.
Share certificates are offered by credit unions and represent member ownership shares.
Why It Matters
Share certificates allow credit union members to earn higher interest rates on their savings compared to regular savings accounts. Because funds are held for a fixed period, these accounts provide predictable returns.
They are commonly used for conservative savings strategies.
How Share Certificates Work
Members deposit funds into a share certificate for a defined term.
Typical features include:
- fixed dividend rate
- set maturity date
- early withdrawal penalties
- predictable earnings
At the end of the term, the funds and earned dividends become available.
Example
A credit union member depositing money into a three-year share certificate to earn a fixed dividend rate is using this savings product.
Share Certificate vs Certificate of Deposit
- Share certificates are offered by credit unions.
- Certificates of deposit are offered by banks.
Both function similarly with fixed terms and fixed returns.
FAQs About Share Certificates
Are share certificates insured?
Yes, they are insured by the National Credit Union Administration (NCUA).
Do share certificates earn dividends?
Credit unions typically refer to interest earnings as dividends.
Can funds be withdrawn early?
Early withdrawals usually result in penalties.
Related Terms
