What is a Certificate at a Credit Union?
Posted: August 7, 2023 in Savings, Achieving Financial Goals
Joining a credit union is a financial decision that comes with a lot of perks. Some of those perks include favorable rates and flexible terms on saving and lending products. One savings product, a certificate, is a great option when you’re looking to maximize your savings. In this article, we’ll explain what a certificate is, how it works, and the benefits it offers members of a credit union.
What Is a Certificate?
A certificate is a type of savings account that allows you to earn dividends on your money while also being insured by the National Credit Union Administration (NCUA). Credit unions offer certificates similar to banks’ certificates of deposit (CD).
Unlike a traditional savings account, where you can withdraw your money at any time, a certificate requires that you keep your money in the account for a set period. During this period, the money earns dividends, and you cannot access the funds without penalty. Often, the longer you keep your money in the certificate, the greater potential to earn more money.
Certificates are a great way to save money and earn a higher dividend rate than traditional savings accounts. They offer the security of NCUA insurance and the potential for higher returns.
Differences Between Certificates, Share Certificates, and CDs
Certificates, share certificates, and certificates of deposit (CDs) are all the same in that they have a fixed term and rate of return. The key difference is that banks offer CDs, credit unions offer certificates or share certificates, and they are both insured by different federal agencies. The FDIC insures certificates of deposit at banks, whereas the NCUA insures certificates or share certificates at credit unions.
Advantages of a Certificate at a Credit Union
Some advantages include the following:
Higher Dividend Rates
Credit unions may offer higher dividend rates on their certificates than banks. Occasionally, specials on certificates are offered to allow you to earn more money on your investment. Click here to view ProFed’s current certificate rates.
Insured Funds
All credit union deposit accounts are federally insured up to at least $250,000 through the NCUA. Meaning your money is safe even if a credit union closes. This gives members peace of mind that their investments are safe and secure.
Flexible Terms
Certificates at credit unions also come with flexible terms. This flexibility allows members to customize their investment strategy to suit their individual needs and goals. For example, members may choose to invest in a short-term certificate if they anticipate needing the funds soon or a longer-term certificate if they are looking for a higher rate of return and do not anticipate needing the funds for the specified time frame.
How to Start Saving With a Certificate at ProFed
Getting started saving money with a certificate at a credit union is simple. First, you must open a membership account and meet the minimum deposit requirements. Next, you’ll decide how long the certificate’s term will last. ProFed certificate terms can range from three months to five years. Once you’ve opened the account and chosen the term, you can earn dividends. Contact us if you need help opening an account with ProFed Credit Union today!
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