Are you looking to grow your hard-earned money, but you’re confused by terms like “share certificate” and “certificate of deposit (CD)”? Which one should you choose?
Both can help you grow your savings, but there are important differences to consider. At Fibre Federal Credit Union, we want to make sure you choose the right option for your financial goals. Let’s break down the differences to see why a credit union share certificate might be a better choice.
UNDERSTANDING SHARE CERTIFICATES VS. CERTIFICATES OF DEPOSIT
Although they may look the same, share certificates and certificates of deposit (CDs) aren’t quite alike, and those distinctions can affect how much you earn. Here’s how each one works:
What Is a Certificate of Deposit?
A CD is a type of savings account that is offered by traditional banks. It’s a low-risk investment that earns interest. A CD allows you to earn a higher interest rate than other savings options, like traditional savings accounts or money market accounts, in exchange for leaving your money in the account for a fixed term. The interest rate is guaranteed, which means your earnings won't be affected by market fluctuations or changes in the economy.
CD terms can range from a few months to several years, so you can choose the best term for your needs. Withdrawing funds before the end of the term usually results in an early withdrawal penalty. CDs are typically insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.
What Is a Share Certificate?
A share certificate is offered by a credit union, like Fibre Federal. Similar to a CD, it’s also a low-risk investment. A share certificate requires you to leave your money in the account for a specific term, and the rate is guaranteed. Share certificates are typically insured by the National Credit Union Administration (NCUA) for up to $250,000.
A key difference is that share certificates pay dividends instead of interest. This means they have the potential to earn higher returns than traditional bank CDs. Many credit unions, including Fibre Federal, provide a variety of terms to fit different savings goals. The penalty for early withdrawal may also be less restrictive than with CDs, which gives members more breathing room if their financial circumstances change.
WEIGHING THE PROS AND CONS
When deciding between a share certificate or CD, it's important to consider their advantages and limitations to see how they impact your savings strategy. Here are the key pros and cons of each option:
Share Certificate Benefits
Potentially Higher Returns: Earn dividends instead of interest, which often results in stronger earnings than traditional bank CDs.
Flexible Terms: Choose from a variety of maturity dates to match your needs. Many credit unions offer longer terms for share certificates than what’s available with CDs.
Lower Early Withdrawal Penalties: Penalties may be less restrictive than with CDs.
NCUA Insured: Deposits are federally insured for up to $250,000.
Safe and Predictable Growth: Fixed interest rates offer guaranteed returns for the length of the term, which gives you predictable earnings.
Credit Union Membership: Enjoy exclusive benefits, including personalized service, competitive rates, and reduced fees compared to other financial institutions.
Share Certificate Limitations
Limited Liquidity: Your money is locked in for the length of the term, which means you can't access it without incurring a small penalty.
Opportunity Cost: Because your dividend rate is locked in, you may miss out on higher earnings if rates rise.
Certificate of Deposit Benefits
Safe and Predictable Growth: Guaranteed interest provides predictable earnings, which makes it a low-risk way to grow your savings.
FDIC Insured: Accounts are federally insured for up to $250,000.
Certificate of Deposit Limitations
Potentially Lower Returns: CDs may have lower interest rates than credit union share certificate dividends.
Potentially Shorter Terms: While a variety of term lengths are typically offered, they may not be as long as the terms for share certificates.
Potentially Higher Early Withdrawal Penalties: Many CDs have stricter penalties if you need to access your funds before the term ends.
Opportunity Cost: If interest rates rise during the term, you have to wait until the term ends to benefit.
THE MEMBER VS. CUSTOMER EXPERIENCE
One of the most significant advantages of choosing a share certificate over a CD is that you can take advantage of the benefits of credit union membership. Credit unions, like Fibre Federal, are nonprofit organizations. They are primarily focused on serving the needs of their members instead of earning profits for distant investors.
As a Fibre Federal member, you're not just a customer. You’re a member, meaning you're one of the owners. Because the credit union is a member-owned nonprofit cooperative, earnings are returned to you through competitive dividend rates and lower fees. You'll also enjoy personalized service for all of your banking needs.
When you open a credit union share certificate instead of a regular savings account, you're not just growing your money. You're participating in a financial system that puts your needs first. That's the credit union difference. It's about people helping people, and your financial success is the top priority.
WHY CHOOSE FIBRE FEDERAL CREDIT UNION SHARE CERTIFICATES?
With Fibre Federal’s share certificates, you get guaranteed returns and member-focused benefits that banks can't match.
Maximize Your Earnings: Fibre Federal’s competitive share certificate rates are often higher than the rates for traditional bank CDs.
Flexible Terms: Choose a term that works for you, from 6 to 60 months.
The Member-Owner Advantage: At Fibre Federal, your financial well-being comes first. You’re not just a customer, you’re a member-owner with a voice in how we operate.
Security and Peace of Mind: Deposits are federally insured by the National Credit Union Administration (NCUA) for up to $250,000.
READY TO GROW YOUR SAVINGS WITH A SHARE CERTIFICATE?
Both CDs and share certificates offer a secure way to grow your savings. However, Fibre Federal's share certificates deliver more. They offer competitive dividends, flexible terms, and the advantages of credit union membership. With Fibre Federal, your money works harder for you, and it's backed by an institution that puts members' needs first.
Don't wait to put your money to work. Open a Fibre Federal share certificate online, drop by a financial services center, or give us a call today. Our friendly team is ready to help you get started.
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