What Is a Share Certificate?
At a credit union, a certificate of deposit is called a "share certificate." It works exactly like a bank CD: you deposit a lump sum for a fixed term (typically 3 months to 5 years) in exchange for a guaranteed, fixed dividend rate. At maturity, you receive your principal plus the accrued dividends.
How Credit Union CD Rates Compare to Banks
Because credit unions are not-for-profit cooperatives, they historically offer higher dividend rates on share certificates than banks offer on comparable CDs. The difference has narrowed in recent years as competition from online banks has increased, but credit unions still tend to offer rates 0.10–0.50 percentage points above the national bank average.
Factors That Affect CD Rates
- Federal funds rate: The Federal Reserve's benchmark rate is the primary driver. When rates rise, CD rates rise; when they fall, CD rates fall.
- Term length: Longer terms typically pay higher rates, though rate inversion (short rates exceeding long rates) can occur during tightening cycles.
- Deposit amount: Many credit unions offer "jumbo" certificate rates for deposits above $100,000.
- Membership tier: Some credit unions offer premium rates to members who also hold loans or checking accounts.
- Credit union financial position: A credit union with excess liquidity may offer lower rates; one trying to attract deposits may offer promotional rates.
Early Withdrawal Penalties
Like bank CDs, share certificates impose penalties for withdrawals before maturity. Typical penalties range from 60 days of dividends for short-term certificates to 180 days or more for 5-year certificates. Always read the penalty schedule before opening a certificate.
Add-On and Bump-Up Certificates
Some credit unions offer specialty share certificates:
- Add-on certificates: Allow additional deposits during the term at the original rate.
- Bump-up certificates: Allow you to request a rate increase once during the term if prevailing rates rise.
- No-penalty certificates: Allow early withdrawal without penalty, typically at a lower rate.
APY vs. Dividend Rate
When comparing certificates, always use the Annual Percentage Yield (APY), which accounts for compounding frequency. A certificate with a 5.00% dividend rate compounded monthly will have an APY slightly higher than 5.00%. Credit unions are required by federal Regulation DD to disclose APY on all deposit products.
Frequently Asked Questions
Yes. Share certificates at federally insured credit unions are covered by NCUA insurance up to $250,000 per member per account category, the same as savings accounts.
Minimums vary widely. Some credit unions require as little as $500; others set a minimum of $1,000 or $5,000. Jumbo certificates often require $100,000 or more.
Most certificates automatically renew for the same term at the current rate unless you instruct the credit union otherwise. You typically have a grace period (often 10 days) after maturity to withdraw funds or change terms without penalty.
Many credit unions allow you to open share certificates through online banking. Some promotional rates require an in-branch visit or phone call. Check the credit union's website for details.
Find Credit Unions Near You
Search our directory of 4,374 federally insured credit unions by name, city, or state.