Are Share Certificates Worth It?

When looking into ways to grow their money, many people wonder, “Are share certificates worth it?” Learn more about how share certificates can help you earn more on your savings.

A unique benefit of using credit unions is access to a share certificate, similar to a certificate of deposit in traditional banks. These certificates offer a great option for earning interest on money you’ll want to use in the future.

What Is A Share Certificate?

A share certificate is a type of savings account where you agree to keep your money, without taking a withdrawal, for a specified amount of time – ranging from a few months to several years. In return, you’ll receive a guaranteed return on investment, typically at a higher dividend rate than traditional savings accounts – making it a worthwhile option.

Are Share Certificates Worth It?

Not sure if a share certificate is right for you? Here are some ways to determine whether a share certificate is the best option for you.

Many people choose share certificates to aid their financial wellness when they have extra savings they won’t immediately need, have a financial goal like saving for a down payment on a home, or seek a low-risk investment.

Why Are Share Certificates A Good Method for Saving?

With a share certificate, you have a fixed interest rate for a specified period of time, which can protect you from typical market fluctuations. A+ FCU offers different term options for share certificates, from six to 60-months. Depending on your savings goals, you can earn more over a longer period or earn in the short term. Another benefit of share certificates, is they typically offer higher dividend rates than interest rates on a CD.

Share certificates are a predictable option because you will know upfront how much interest you will earn at the end of the fixed term. Plus, share certificates are insured by the National Credit Union Administration, similar to FDIC coverage for traditional banks.

How A Share Certificate Can Help You

There are many benefits to choosing a share certificate to grow your savings. Some of these benefits include the following.

Build Your Emergency Fund

Are you prepared to cover an unexpected expense? According to CNBC, some 44% of Americans can’t pay an unexpected $1,000 expense from savings. To help avoid turning to credit cards or personal loans, make a plan and build your emergency fund.

Experts recommend having at least 3-6 months’ worth of living expenses saved so that you’re prepared for unforeseen situations – like car repairs, medical emergencies, or even job loss. A share certificate can be an excellent tool to build an emergency fund thanks to their above-average dividend rates. Not to mention that the funds are inaccessible for a set term, taking away the temptation to spend it.

It may take time to build your savings so don’t be discouraged, it’s okay to start small.

Low-Risk Account

The U.S. Securities and Exchange Commission considers a share certificate to be one of the safest savings options. Unlike stocks or other volatile investments, they’re deemed low-risk due to guaranteed returns – assuming you hold until maturity – and your principal investment is protected regardless of market fluctuations.

Additionally, share certificates at federally insured credit unions are backed by the National Credit Union Association (NCUA) – which is backed by the full faith and credit of the U.S Government. This adds another layer of protection for you as funds up to a certain amount are guaranteed regardless of if the institution fails.

Special Features

Many financial institutions offer special certificate options, providing additional flexibility or benefits. Common incentives may include:

• Allowing additional deposits during the term – StartUP Certificate
• A one-time option to adjust the rate should it go up during your term – Plus Advantage Certificate
• Using a rewards program to buy up the rate – PlusPoints

You can also look for zero penalties for early withdrawals or higher dividend rates for longer terms. Make sure to explore all your options to determine which aligns with your financial needs and goals.

Higher Earning Rates

Rather than putting this money into a savings account, share certificates typically offer higher earning rates through dividends. They can also encourage long-term saving, benefitting people who impulsively withdraw money from their savings accounts. Opening a share certificate can be a pivotal first step to long-term savings habits and achieving larger financial goals, like buying a home or starting a family.

Credit Union Membership Benefits

By entrusting your money in a share certificate at a credit union, you’ll often receive other benefits from that credit union. Many credit unions will offer higher dividend rates on other accounts if you hold a share certificate or offer loyalty rewards, like discounted loan rates. When choosing a share certificate, it’s a good idea to ask the credit union about these possible added benefits.

A+FCU offers many types of certificates to help members grow their money. Choose a StartUP Certificate, a flexible option that offers higher yields, or a Plus Advantage Certificate, a share certificate that allows a special one-time increase in the dividend rate should rates go up during your term.

Summary

If you prioritize safety, liquidity, and predictable returns, a share certificate can be a valuable component of your overall investment strategy – especially when building an emergency fund, saving for short- and long-term goals, or preserving capital.

Open A Share Certificate With A+FCU

At A+FCU, we’re passionate about helping our members achieve their saving goals and using a share certificate is easy and low-risk. Invest in your future by choosing a term from six to 60 months, and use your PlusPoints to boost the dividend rate by 0.25%.