CDs vs. Share Certificates: What’s the Difference (And Why Should You Care)?

Sep 19, 2018 Personal Finances

Understand the similarities and differences about Certificates of Deposit and Share Certificates so you can make an informed decision for your finances.

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If you’re shopping around for financial products, you may have come across two similar things with different names: Certificates of Deposit and Share Certificates.


Both offer long-term solutions to making the most of your money; both have similar terms; and both are considered to be safe bets for your cash.


CDs and Share Certificates really only have one distinction between them: the latter is a product offered by credit unions. CDs are offered by banks. At a credit union, you earn dividends on your money; at a bank, you earn interest.

How They Work

CDs and Share Certificates are designed for the long term. You put money in, and the longer your term, the more dividends/interest you earn when you withdraw. Consumers like them because the rates tend to be higher than other savings accounts.

However, the dividend/interest earned is fixed when you open the account. This is nice if interest rates go down, but if they rise, your earnings won’t be worth as much.

Long-term Security

Another reason these products are popular as a long-term strategy is security. Share Certificates are guaranteed by the National Credit Union Share Insurance Fund (NCUSIF), while CDs at banks are insured by the FDIC. Your money will stay safe for the life of the account.

Early Withdrawal Penalties

Because the terms typically range from several months to several years, consumers face pretty strong penalties for early withdrawal. In fact, sometimes the fees are so high that they negate your earnings from the account.

If you have a comfortable savings cushion, want an easy way to earn extra money, and don’t think you will need to withdraw it in the near future, a CD/Share Certificate is a smart choice.

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