Share Certificates FAQs: All the Details You Need
Saving money can feel hard when prices rise and budgets get tight. You want a safe place to grow your money without taking on big risks. A share certificate may be a good option if you want steady growth. Share certificates are offered by credit unions and may pay higher dividends than other savings accounts.
Credit union share certificates let you lock in a fixed rate for a set amount of time. This gives you predictable growth. They're a type of secure savings account that rewards patience.
This FAQ guide will help you learn how they work, why people choose them, and how you can open one at Empower Federal Credit Union.
How does a share certificate differ from a regular savings account?
With a regular savings account, you can move money in and out whenever you want. With a share certificate, your money must stay in place for a set term. In return, you may earn higher dividends.
Are share certificates only available through credit unions?
Banks offer something similar called certificates of deposit, sometimes referred to as “CDs.” Credit unions use the term “share certificate” because you are a member-owner.
Are share certificates insured or guaranteed?
Yes. Share certificates at Empower FCU are insured up to federal limits. This means your money stays protected even during uncertain times. Insurance makes share certificates a secure savings account choice.
Can I withdraw money early?
Many share certificates have penalties if you withdraw before the maturity date. These penalties help keep rates higher for all members. If you are unsure about locking funds, start with a smaller amount (like $500) until you feel more confident. You can also choose a shorter term.
How are dividends calculated?
Dividends are calculated based on your balance, your fixed rate, and your term length. Empower FCU credits dividends on a schedule shown when you open your certificate. Longer terms usually earn higher rates.
What happens when a share certificate matures?
When your certificate reaches the end of its term, you can:
- Renew for a new term.
- Move funds to a different savings account.
- Withdraw without penalty.
How do I open a share certificate at Empower FCU?
You must be a member of Empower FCU to open a share certificate account. If you're not yet a member, apply to join. You can open credit union share certificates online or at a local branch. It’s a good idea to compare rates before choosing a term.
You'll need:
- A membership savings account.
- A deposit amount.
- A driver’s license or other ID.
Do share certificates have fixed rates?
Yes, share certificates are known for fixed rates. This means your rate stays the same for your whole term. You do not have to worry about surprise changes.
What terms are available?
Terms vary, but common options range from a few months up to five or ten years. Shorter terms offer faster access. Choose a term that fits your goals.
Are share certificates good for short-term savings goals?
Share certificates can be good for short-term savings goals. However, they usually come with early withdrawal penalties. So, they may not be suited for goals you need to achieve urgently like a medical procedure or a car repair.
Share certificates can be appropriate to save for short term goals like:
- A small emergency fund.
- Seasonal expenses.
- A future move.
Are share certificates good for long-term goals?
Yes, share certificates can be a great way to save for long-term goals.
Many people use them for:
- A down payment fund.
- Future travel.
- A safety cushion.
- Large purchases.
You can also open more than one certificate at different terms to create a steady rotation, called “laddering.”
What is share certificate laddering?
Laddering means you open several share certificates with different maturity dates. As each one matures, you can renew it or access the money. This helps you earn higher dividends than standard savings account while keeping some access open.
Do I pay taxes on dividends earned?
Yes. Dividends on share certificates are considered income. If your dividends are over the IRS threshold, you may receive a tax form at the end of the year. A tax professional can help if you have questions.
What happens if dividend rates rise while my share certificate term is locked?
Your rate stays the same, even if market rates change. This protects you when rates fall. If you worry about missing future increases, choose shorter terms so you can adjust more often.
Can I open more than one share certificate?
Yes. You can open several share certificates if you qualify. This can help spread out maturity dates, protect against rate changes, and organize savings for different goals.
Is a share certificate risky?
No. Share certificates are considered low-risk because they have a low probability of losing value. They may only lose value if the early withdrawal penalty exceeds the dividends earned.
Want to learn more?
See Empower FCU's current share certificate options. You can also find out more information with our FAQs.