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Share Certificates: A Versatile and High-Yield Savings Tool

Share Certificates are a great way to earn a higher yield if you don't need access to your money for six months or longer. Let’s take a closer look at Share Certificates by addressing some frequently asked questions about these versatile savings tools.

What is a Share Certificate?

A share certificate is a certificate of deposit issued by a credit union. Funds are held for a specified time period in order to earn a specified yield.

Is a Share Certificate Similar to a CD (Certificate Of Deposit)?

Yes. The main difference is that Share Certificates are issued by credit unions, and CDs are issued by banks. At credit unions, we refer to savings deposits as shares. That’s because opening an account with a credit union like Wailuku Federal Credit Union makes you a member and owner of that credit union.

How Do Share Certificates Work?

You’ll shop for and select the share amount and term that fit your financial situation. Different credit unions offer different options with different rates and yields. At Wailuku Federal Credit Union, we offer Share Certificates with terms between 6 and 60 months and opening balances starting at $1000. Generally, the longer the term of the Share Certificate, the higher the dividend.

What are the Benefits of Share Certificates?

  • The rates are better. The interest rate and dividends tend to be higher than those of regular savings, checking, or money market accounts. Though there are some restrictions and penalties for removal of funds to consider with Share Certificates, the reward is you’ll earn a higher yield than with any of these other options. In addition, opening deposits for Share Certificates are as low as $1,000. Most money market accounts require larger deposits but produce lower returns.
  • There are no surprises. There are no unknowns when you invest in a Share Certificate. You pick the deposit amount, the term, and the rate. So you’ll be able to determine the exact dividend you’ll earn once your term is up. The rate is locked in, so the dividend is also fixed at the time of purchase. You know everything you need to know from the start, and nothing changes as long as there’s no early withdrawal.
  • They’re safe and secure. You can rest easy, because Share Certificates are guaranteed by the National Credit Union Administration (NCUA) for up to $250,000.

What are some of the Restrictions of Share Certificates?

A Share Certificate is a time deposit, similar to bonds and CDs, so its funds are off limits for the term of the certificate. This is why you get better rates and higher yields – the tradeoff is you’re losing easy access to those funds. Therefore, you can’t withdraw your deposited funds during the certificate’s term without a significant penalty. But again, there are no surprises with Share Certificates – these restrictions and penalties are all apparent from the beginning.

How Can I Learn More or Get Started?

With so many term and rate options to choose from, sorting through your Share Certificate options on your own can be daunting. Rest assured, your friends at Wailuku Federal Credit Union are here to help – whether you’re ready to settle on a Share Certificate and let your funds get to work, or you’d just like to explore your options for future deposits.

Whatever your financial situation and goals, Wailuku Federal Credit Union has the tools to help make your dreams a reality.

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I recently applied for a mortgage loan at Wailuku Federal Credit Union. The employees there were very helpful and knowledgeable and answered all of my questions. Without their help I would not have been able to purchase my home. I highly recommend seeing them for your financing needs.
-Lance B.