Is this a Good Time to Open a Share Certificate?
Q: I’m looking for a place to park my savings, and one option I’m considering is a share certificate. Is this a good time to open one?
A: Today’s economic climate makes share certificates a fantastic and secure choice for growing your funds. Let’s take a closer look at this type of savings account and why this is the perfect time to open one.
What is a share certificate?
A share certificate is just like a certificate of deposit (CD) that’s opened at a bank. It is a savings account that boasts of a fixed earnings rate through a fixed date of maturity, or term. The dividend rates of these accounts are usually higher than those on share savings accounts, but access to the funds in them is more limited. Most certificates will not allow the account owner to add money after the initial deposit. Also, most often, a withdrawal of the funds before the maturity date will result in an early withdrawal penalty.
Is this a good time to open a share certificate?
With recent reports showing inflation cooling, and with dividend rates higher than any time in recent memory, this can be a great economic climate for opening a certificate. Here are four reasons why this is a great time to open one:
- High dividend rates. When investing in an account possessing a locked-in dividend rate, that rate is of the utmost importance. In today’s high-interest environment, funds in certificates will likely have a favorable rate. According to the FDIC, interest rates on traditional savings accounts hover at 0.40%, while rates for CDs/certificates average from 4-5%, or even higher. At Sharefax Credit Union, we offer certificates with great rates.
- Reliable interest rate. Most high-yield accounts have variable rates that fluctuate along with the national rate. Rates for certificates, however, are locked in for the entire account term. This is an especially beneficial feature during an environment of high interest rates and an uncertain economic future. With today’s volatile economic climate, the stability of certificates makes them a great choice for investors.
- Safety and security. The security of your funds is always a priority, but in light of recent bank failures, it’s more important than ever. Investors are looking for ways to protect their funds from market fluctuations and other forms of instability, so a certificate gives them the security they need. Certificates at Sharefax Credit Union are federally insured by the National Credit Union Administration (NCUA), up to $250,000. Your money is always safe here.
- No access to your funds. The general lack of accessibility inherent with certificates can be a great advantage in today’s environment. With your funds locked away until the end of the term, you’ll be forced to leave them in the account or risk incurring a penalty. This will reduce the temptation to overspend and neglect your savings. Please note, though, that it’s only advisable to open a certificate if you know you will not need to access these funds until the term ends. If you do not have an emergency fund to get you through unexpected expenses, or you are not making it through the month on a regular basis, a certificate may not be a good choice for you at this time.
Share certificates have always been a favorite choice for investors who are seeking a secure and high-yield account for their funds. In today’s economic climate, they’re more popular than ever. Use this guide to learn why this is a great time to open one.
See our current rates at Sharefax.org.