FAQs About Share Certificates

If you are looking for a way to boost the power of your savings without making a risky investment, a share certificate could be right for you. Share certificates are issued by credit unions and reach maturity after a set period of time. Typically, they can be opened with a small deposit, making them a good addition to many people’s overall savings strategy. Could a share certificate be right for your savings goals? Here are the answers to questions you may have about this credit union savings tool.

How is a share certificate different from a CD?

Share certificates are essentially the same thing as a CD, or certificate of deposit. When this kind of savings vehicle is issued by a credit union instead of a bank, it is called a share certificate instead of a CD, but it functions in the same way. Share certificates are as safe as CDs, as they are protected by the National Credit Union Share Insurance Fund. The difference is that share certificates often earn higher interest than CDs, since credit unions are nonprofit institutions.

What are the benefits of share certificates?

Share certificates offer a way to earn higher interest on your savings than you would in a standard savings account. They are an alternative to risky investments and allow you to start saving with a relatively small opening deposit. Share certificates have fixed interest rates that increase incrementally, so you know exactly how much interest you can earn and how long it will take.

What if I have to remove my money from a share certificate early?

Share certificates are intended to be long-term savings tools, but sometimes, it is necessary to withdraw the money early. If you do, there may be a penalty, and you will miss out on some of the interest. The specifics of the penalties depend on the share certificate you choose.

If you have questions about share certificates or other savings tools, call GCS Credit Union today. You can speak to a member of our credit union team in O’Fallon about how we can help you reach your financial goals by calling (618) 797-7993.

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