SeaComm Federal Credit Union OFFICIAL BLOG

Savings 101: What Is a Share Certificate?

No one wants to play around with savings. A share certificate is a great way to invest your savings in a place that offers your money its biggest chance at growth without risking a loss. Continue reading to learn about this savings option, and whether or not it is right for you!

What is a share certificate?

A share certificate is a federally insured savings account with a fixed dividend rate and a fixed date of maturity. The dividend rates of these accounts tend to be higher than those on traditional savings accounts, and there is generally no monthly fee to keep the certificate open.

Aside from the higher dividend rate, share certificates differ from savings accounts in the more limited accessibility of the funds within the account. A typical certificate will not allow you to add any money to the certificate after you have made your initial deposit. You also won’t be able to withdraw your funds before the maturity date without paying a penalty.

Terms and conditions of certificates:

You will need to meet some basic requirements before you can open a certificate including a minimum opening balance and a commitment to keep your money in the account for a set amount of time.

The minimum amount of funds you will need to deposit to open a certificate will vary. It also depends upon the term you choose. In general, the more money you invest in a certificate, the higher rate of interest it will earn. At SeaComm, you can open a certificate with as little as $1,000. The minimum is $500 for our young savers!

Here at SeaComm, we offer our members certificates that can be opened for just 18 months or as long as 5 years. Our dividend rates start at 0.50% APY* for short-term certificates, and going up to 1.75% APY* for our long-term options.

*APY = Annual Percentage Yield

Is a share certificate for everyone?

While keeping your savings in a certificate can be an excellent option for your money, it is not for everyone. Before you move forward with opening a certificate, be sure you won’t need to access the funds prior to the certificate’s maturity date. It’s best to have a separate emergency fund set aside to help you through an unexpected expense.

What are the benefits of a share certificate with SeaComm?

Low risk: With each SeaComm certificate insured by the National Credit Union Administration (NCUA) up to $250,000, you can rest easy knowing your money is completely secure.

Higher dividend rates: Since the certificate holder is not able to withdraw money liberally, like regular savings account holders, a certificate is often more valuable to the financial institution. For this reason, the interest rate offered with a certificate is higher than a traditional savings account, which provides you with an opportunity to earn more for your money!

Locked-in rates: There’s no stressing over fluctuating national interest rates with a certificate. The rate is set when you open the account, and is locked in until its maturity date. This means you can calculate exactly how much interest your money will earn over the life of the certificate the day you open it.

Access to Enhanced Loyalty Rewards: As a SeaComm member, you have a chance to receive additional basis points on certificates by meeting certain criteria; one-year membership, one loan product, enrolled in E-Statements, member for 5-9 years, and more! Rewards are based on services used and length of membership. In addition, all veterans also earn an additional .15 basis points.

A share certificate with SeaComm may be opened in minutes at any branch, or by calling a Member Services Representative at (800) 764-0566. Click here to learn more!

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