Everyone wants to get more bang for their buck, especially as it pertains to investment opportunities. A share certificate will allow you to put the money you have saved into an account that usually has a higher interest earning potential. This is especially helpful for those that want to make sure that they don’t touch their money while it’s growing. A share certificate account is similar to a certificate of deposit (CD), but it is issued by a credit union, rather than a bank.
What is a share certificate?
Share certificate accounts act like a traditional savings account in that you can deposit money to collect dividends over time. However, it is different in that you cannot withdraw or deposit money at will. Instead, you agree to place your money in a share certificate account for a preset period of time (called “term length”).
How do share certificates work?
Because you are entrusting a credit union with your money for a set period of time, we are able to give you a higher percentage rate on the money within the account. The higher the percentage rate, the more growth on your money. The longer you keep your money in the account, the more it grows.
And because a share certificate is with a credit union, which is member-owned, we are able to offer better rates than most banks. In general, share savings certificates offer a much higher return than savings deposits, if you’re willing to wait the time it takes to get your money back.
What are the risks/benefits involved with share certificates?
Camino’s certificates are federally insured by the National Credit Union Administration (NCUA), a US government agency. Each account is federally insured up to $250,000, so you know your funds are safe and sound.
If you decide to withdraw your money earlier than the term, there is a penalty. On average, it can cost you between three and six months of earned dividends.
Is a share certificate right for me?
There are many good reasons why certificates can be the right choice. If you tend to impulse buy, the certificate is a great way to lock your savings away from yourself. Understanding the penalties involved in early withdrawal can prevent you from spending the money and allow your money to continue to grow.
The average annual percentage yield (or APY) on certificates is 0.25%. At Camino, we are offering (for a limited time only) 18-month certificates at a 3.00% APY with a minimum deposit of $2,500 up to $250,000 with money not presently on deposit with Camino. If you are interested in opening an account go online at caminofcu.org, come by one of our branch locations, call us at (800) 835-3400.