Share Certificates 101

March 3, 2023

Categories: Education, Financial Goals, Financial Literacy, Financial Planning, Financial Resources, Financial Security, Financial Wellness, Financials 101, Future Planning, Investing, Reaching My Summit, Retirement, Tips

By Dawn Kellogg 

If you have some extra savings and want to earn higher dividends than a regular savings or money market account, a share certificate might just be the perfect way.

Share Certificates are the credit union version of a Certificate of Deposit – a high-yield, short-term way to save for the future. Share Certificates are a great way for credit union members to grow their savings just by setting aside money for a predetermined period.

Credit unions will have flexible terms ranging from 90 days to 10 years.  It’s low risk and you choose the amount you want to deposit and the length of the term. However, during the term, you cannot touch your money without paying a penalty.

Where a Certificate of Deposit at a bank earns “interest,” share certificates earn “dividends.” The result to the saver is the same, but because credit unions are member-owned, a credit union can typically offer better rates than a commercial bank. During the term, you earn a fixed percentage yield or Annual Percentage Yield (APY), which will be given to you at the end of the term. Term lengths can vary, but the longer the term, the higher the yield.

There will generally be a minimum balance – at The Summit, you can open a share certificate for as little as $500 ($50 for youth accounts), but there rarely is a maximum balance – you can put in as much money as you like. The Summit has a Jumbo Share Certificate for those who want to invest $75,000 or more. This type of share certificate offers the highest yields with terms from 30 days to 42 months. The Summit’s Youth Share Certificate offers the same yields and terms as regular share certificates, but with a lower minimum.

When the term of your certificate is over, you have the option to roll the certificate over, or withdraw the funds and put it back into your savings or checking account.

Share Certificates are perfect for parents or grandparents who want to set aside money for the future of their children and grandchildren, and for those who have built up their savings and are looking for new ways to invest.

Share Certificates are another way that The Summit can help make your money work for you!

Dawn Kellogg is the Public Relations and Community Engagement Specialist for The Summit Federal Credit Union.