All You Need to Know About Share Certificates and How They Differ from Savings Accounts

No one wants to play around with their savings, especially when it comes to maximizing growth while minimizing risks. One option that could work well for you and diversify your savings portfolio is a share certificate. Unlike traditional savings accounts, share certificates offer higher growth potential while maintaining the security of a typical savings account. Let’s take a closer look at this savings option and why it might be the perfect choice for you.

What is a share certificate?

A share certificate, also known as a savings certificate or CD (Certificate of Deposit), is a federally insured savings account with a fixed dividend rate and a specific maturity date. These accounts typically offer higher dividend rates compared to regular savings accounts.

How share certificates differ from savings accounts

There are several differences between a share certificate and a savings account, but the primary factor that sets them apart is the accessibility of the funds. Whereas a savings account will have minimal restrictions or penalties on withdrawals, the funds deposited into a share certificate can’t be withdrawn until the maturity date without a penalty. However, the penalty will never be more than dividends earned.

Terms and conditions of share certificates

To open a share certificate, you need to meet certain requirements. These include a minimum opening balance and a commitment to keep your money in the account for a set amount of time. The minimum deposit amount varies across financial institutions and depends on the chosen term. If you’re interested in opening a share certificate SCU, visit our website to see our most up-to-date rates.

Is a share certificate for everyone?

While keeping your savings in a certificate can be an excellent option for your money, it is not for everyone. Before you go this route, ask yourself these important questions:

• Do I have an emergency fund set aside to help me get through unexpected events or circumstances?
• Do I anticipate needing to access these funds during the life of the certificate?

Only go ahead with your decision to open a share certificate if you are fairly certain you will not need to access these funds before the maturity date.

Advantages of diversifying your savings with a share certificate

Diversifying your savings portfolio through a share certificate offers several advantages:

• Low risk: Share certificates are federally insured, providing complete security for your invested money. At Scott Credit Union, each certificate is insured by the National Credit Union Administration for up to $250,000, with additional independent insurance coverage.
• Higher dividend rates: Share certificates provide the security of savings accounts while offering higher yields. By choosing a certificate, you can earn more on your savings compared to a regular savings account.
• Locked-in rates: With a share certificate, you don’t need to worry about fluctuating interest rates. The APY is set at the time of account opening and remains locked until the maturity date. This stability allows you to calculate the exact amount of interest your money will earn over the certificate’s life.

If you’re looking for a secure and potentially higher-yielding option for your savings with a share certificate, we can help!  Learn more about share certificate options from Scott Credit Union online or visit your local branch today.