Family Saving for a Share Certificate

By Chandler Sullivan
June 18, 2024 | 5 Min. Read

  • Deposit Commitment: You choose an amount of money to deposit into the Share Certificate unless the amount minimum is specified.
  • Fixed Term: You agree to leave this money in the account for a predetermined period, ranging from a few months to several years. This fixed term will depend on your savings goals and risks.
  • Fixed Interest Rate: Credit unions offer a fixed dividend rate, often higher than regular savings accounts, which is paid out periodically.
  • Maturity: At the end of the term, known as the maturity date, you can withdraw your initial deposit along with the earned dividends without any penalty.
  • Higher Returns: The higher dividend rates mean your money grows faster compared to a regular savings account.
  • Low Risk: Share Certificates are low-risk investments since they are insured by the National Credit Union Administration (NCUA) up to $250,000, similar to the FDIC insurance for banks.
  • Fixed Rates: Knowing exactly how much you’ll earn over the term can help with financial planning and goal setting.
  • Interest Rates: Both Share Certificates and CDs typically offer higher interest rates than regular savings accounts. The rates can vary between institutions, so it’s worth comparing the offerings from credit unions (for Share Certificates) and banks (for CDs).
  • Membership: Share Certificates are available through credit unions, which usually require membership. If you’re already a member of a credit union, a Share Certificate might be a convenient option.
  • Early Withdrawal Penalties: Both Share Certificates and CDs generally have penalties for early withdrawals. The terms of these penalties can vary, so it’s important to understand them before committing.
  • What are my financial goals?
  • Am I saving for a specific goal, such as a down payment on a house, a vacation, or an emergency fund?
  • Do I need a predictable return on my investment for a particular timeframe?
  • Can I commit to the time period?
  • How much risk am I willing to take?
  • Do I prefer a fixed rate of return over the potential for higher, but more volatile, returns from other investments like stocks?
  • Do I understand the penalties of early withdrawal?
  • How does a Share Certificate align with my overall savings and investment strategy?
  • Have I compared Share Certificates with other savings products like Certificates of Deposit (CDs), savings accounts, and investment accounts?
  • Am I a member of a credit union or willing to become one?

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