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Posted February 14, 2019

One step on the path to financial success is understanding how to invest your money and the best ways to do so. A product credit unions offer is a share certificate, a higher dividend account in which funds are set aside for a particular amount of time. Not sure if a share certificate is the right option for you? Consider these three reasons.

Build Your Emergency Fund

Are you prepared to cover an unexpected expense? According to CNBC, a mere 39% of Americans have enough in their savings to cover a $1,000 emergency.

An emergency savings is usually defined as 3-6 months of living expenses in the case of an unforeseen situation like medical emergencies or car repairs.

Share certificates are a great way to start building an emergency savings because of their high dividend rates and because the funds are inaccessible for that term, so you won’t have the temptation to spend it.

If you think you might need the money sooner rather than later, choose a certificate that better suits your time frame.

Low-Risk Savings Opportunity

Unlike stocks, share certificate rates are fixed throughout the term. The U.S. Securities and Exchange Commission considers them one of the safest investments to make. You also don’t risk losing what you invest and the dividends earned on a certificate are yours to keep. Additionally, share certificates at credit unions are federally insured by the NCUA.

Special Features

Many financial institutions offer a special program for investing a certificate with them. Common incentives include zero penalties for early withdrawals or a higher interest rate for a longer term.