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Term-share certificates

Can a term-share certificate help boost your savings?

Updated on July 25, 2022, at 2 p.m. CT

What if your savings could be working harder for you?

With interest rates rising, now’s a good time to look for opportunities to earn more as you save. And term-share certificates can be a great way to do that if you don’t need immediate access to some of your savings.

With a term-share certificate, you put money in for a locked period in exchange for a higher interest rate than you’d get with a traditional savings account or money market account.

These unique accounts blend the higher growth potential of a stock investment with the security of a typical savings account.

Learn more about how term-share certificates work—and what to consider when deciding whether this savings strategy makes sense for you.

What’s a term-share certificate?

Term-share certificates are sometimes called savings certificates or share certificates. It’s the credit union’s version of a certificate of deposit, or CD for short.

The federally insured savings account has a fixed dividend rate and a fixed maturity date. So you know upfront exactly how much you’ll earn!

Certificates usually earn a higher interest rate than traditional savings accounts. Plus, the money compounds interest during the term.

Compound interest

Compounding is when interest is added to the principal of a deposit that also earns interest. It helps your savings grow more quickly. Einstein called it “one of the most powerful forces in nature.” And it’s true! See how compound interest works >

But with term-share certificates, you don’t have the same access to your funds as you do with a traditional savings account.

You typically can’t add money to a certificate after you’ve made your initial deposit. You also can’t withdraw your funds before the maturity date without paying a penalty.

Terms and conditions of certificates

You’ll need to meet some basic requirements to open a certificate:

  • Minimum opening balance, which depends on the certificate you choose.
  • Commitment to keeping your money in the account for the term of your certificate.

Minimum opening balances and term lengths vary among credit unions.

Dupaco offers term-share certificate terms as short as six months and as long as 60 months.

In general, the more money you invest in a certificate, the more you can earn.

When it’s a useful savings strategy

Maybe you received some extra cash through a work bonus or inheritance. Or, you’ve been rocking your savings plan and have accrued more funds.

It’s worth considering whether your money could grow even more in a certificate.

Term-share certificates can be a smart way to save for larger purchases like a vehicle or house down the road.

If you know you don’t need the funds for a certain period, why not get paid more?

It’s also a great way to save because the money is out of sight, out of mind. (At Dupaco, you’ll still see the funds in Shine Online or Mobile Banking. But you can’t access the money without paying a penalty to take it out early.)

In other words: It forces you to save it!

Certificates are a safe and secure option, too, because they’re federally insured. The National Credit Union Association insures your deposit up to $250,000.

Plus, there’s no stressing over fluctuating national interest rates with a certificate. Your dividend 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!

Learn how to save more automatically >

What to consider

But term-share certificates aren’t for everyone.

Before you open a certificate, be sure you won’t need to access the funds before its maturity date. It’s best to have a separate emergency fund to help you cover an unexpected expense.

(Ideally, you want to keep at least three to six months’ worth of expenses accessible in an emergency fund.)

If you think you’ll need the funds for any reason while they’re locked in the certificate, you might want to rethink your plan.

Remember, you can get funds out early. But you have to pay a penalty to do so.

Instead, consider putting a smaller amount in a certificate and depositing the rest in a liquid money market account.

The money market still earns higher interest than your regular savings accounts. But you can access those funds whenever you need to.

Explore our certificates >