November 30, 2018

Hand holding gift wrapped in money with bow

If you’re fortunate enough to have extra money that you’re trying to save this holiday season and you’ve been shopping around for a great rate, you’ve likely come across two similar products offered by banks and Credit Unions: Certificates of Deposit (CDs) and Share Certificates. If you’ve wondered what the difference is, you’ve come to the right place.

Similarities & Differences

Both CDs and Share Certificates offer a long-term solution to saving your money. They have similar terms and are considered to be a safe way to help your money grow over a fixed period of time.

The major difference between the two is that a CD is a product that earns interest, offered by a traditional bank, and insured by the FDIC, while a Share Certificate is a product offered by member-owned, non-profit Credit Unions - like LUSO. Profits made by Credit Unions are returned to the members in the form of reduced fees, higher savings rates, and lower loan rates. As a member, you earn dividends on your money through competitive rates. Share Certificate funds are federally insured by the National Credit Union Administration (NCUA), up to $250,000.

How Do They Work?

Share Certificates are designed as long-term money-saving products. You cannot withdraw from the account without penalty during your pre-selected term length, but you will likely earn a higher rate than a regular savings, checking or money market account. The longer you leave your money in a Share Certificate, the more interest/dividends you earn when you withdraw.

Unlike a regular savings, checking or money market accounts – whose rates may fluctuate, depending on the economy – Share Certificate rates are fixed when you open the account. If interest rates go down, you’ll be locked at your higher rate for the duration of your term.

Early Withdrawal Penalties

Share Certificate terms typically range from several months to several years. LUSO Federal Credit Union offers competitive rates for Share Certificates, ranging from 3 months to 60 months. Our VIP Bankers are available to sit down with members who are interested in opening a Share Certificate to select a term length that coincides with their long-term saving goals. If a member wishes to withdraw funds from a Share Certificate before the end of their term, their account is subject to early withdrawal penalties.

Looking to Open An Account?

If you are comfortable with your savings cushion, are looking for a way to earn a higher dividend, and don’t think you’ll need to withdraw it before your term is up, a LUSO Federal Credit Union Term Share Certificate may be a smart choice for you. Whether you are a new or existing member, we can discuss our relationship pricing options with you and work out a Share Certificate rate that will fit what you’re looking for. Contact our Member Service Department for Share Certificate Specials and Relationship Pricing Details.

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