All You Need to Know About Share Certificates

No one wants to play around with their savings. You work hard for your money, and if you’ve built up a sizable nest egg. Now, you’ll want to park it somewhere safe where it will have the best chance at growth.

If you’re looking for a place to keep your savings, a share certificate at MIT Federal Credit Union can be a fantastic option. These accounts offer the best of both worlds when it comes to savings — blending the growth you’d expect from a stock with the security of a savings account.

Here’s why this savings product might be the perfect choice for you:

What is a share certificate?

A share certificate is a [federally] insured savings account with a fixed dividend rate during a fixed date of maturity. The dividend rates of these accounts are usually higher than those on savings accounts, but you’ll have more limited access to the funds. Most certificates will not allow you to add any money to the certificate after you’ve made your initial deposit and you won’t be able to withdraw your funds before the maturity date without paying a penalty.

Terms and conditions of certificates

You’ll 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 specifications of these requirements vary with each institution. In general, though, the more money you invest in a certificate and the longer its maturity term, the higher the dividend rate on the certificate.

Is a share certificate for everyone?

A share certificate is best for individuals who have a separate emergency fund to cover those surprise expenses. Before you open a certificate, make sure you won’t need to access the funds before the maturity date.

What are the advantages of a share certificate? 

• Low risk. With each MIT Federal Credit Union certificate insured by [the NCUA] up to $250,000, your money is completely secure.
• Higher dividend rates. Certificates offer all the security of savings accounts with higher yields.
• Locked-in rates. The APY on a certificate is set when you open the account and is locked in until its maturity date.