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Share certificate vs. CD: how do they compare?

Share certificates and CDs are both savings accounts and are essentially the same. The main difference is that share certificates are offered by credit unions and CDs are offered by banks. Share certificate yield dividends, whereas CDs earn interest.

At Credit Union of Southern California (CU SoCal), we make opening a share certificate easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

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What is a share certificate?

A share certificate is a type of savings account that’s unique to credit unions. To open a share certificate account requires that a specific amount of money be deposited as an opening account balance. Share certificates have a specific term (timeframe) that the money must remain in the account, during which a specific dividend rate is earned.
For example, a credit union may offer a 6-month share certificate with a $1,000 minimum opening balance, and earn a 2.37% dividend rate and 2.40% APY (Annual Percentage Yield.)
The interest earned on a share certificate is expressed as a “dividend yield.” This is because credit unions are Member-owned organizations in which customers are Members and shareholders in the credit union. When a share certificate earns interest it’s considered a dividend.

What is a CD?

A certificate of deposit (CD) is a type of savings account that is offered by banks. CDs work the same as share certificates. Opening a CD account at a bank requires that a minimum opening amount be deposited (you can open the account with more than the minimum too), for a specific term (timeframe) during which a specific interest rate will be earned. For example, you may open a 6-month CD with $1,000 that will earn an interest rate of 1.98% and an APY of 2.00%.
Credit unions tend to offer higher interest rates on savings accounts than banks.

Advantages of share certificates

Opening a share certificate has many advantages, including:
Guaranteed rate of return. All share certificates, no matter the term (length the certificate must be held), provide a guaranteed rate of return (dividend). The more money you deposit, the more interest you’ll earn.
Flexible term options. There are many terms to choose from, such as 3-, 6-, 9- months, 1-year, etc. The longer the term, the higher the corresponding dividend/APR.
Federally insured. All credit union deposits are insured by the National Credit Union Administration (NCUA) for up to $250,000. The NCUA is an independent agency created by the U.S. government to regulate and protect credit unions and their owners. This makes credit unions as safe as traditional banks. Bank deposits are federally insured by the FDIC for up to 250,000.
Special offers and features. Some credit unions may offer a one-time withdrawal or one-time/unlimited add-on option that lets you deposit more money into the account up to a specific threshold amount.

How do share certificates compare?

Here’s how share certificates compare to other savings account options:
Share certificates vs. savings accounts. Share certificates will typically earn a higher interest rate than an interest-bearing savings account. Savings accounts let you access your money whenever you need it.
Share certificates vs. money market accounts. A money market account is opened like a regular savings account, and allows for a limited number of withdrawals each month. Share certificates typically earn a higher interest rate than money market accounts of the same balance amount.
Share certificates vs. retirement accounts. A traditional Individual Retirement Account (IRA), Roth IRA, and 401(k) are types of accounts that help people save money for retirement by earning interest that becomes accessible to the account holder in retirement. Most credit unions offer IRA share certificates.

When does investing in a share certificate make sense?

Before investing in any type of financial instrument it’s a good idea to consult with a financial professional you trust, such as a financial advisor and/or a tax accountant. Investing is a personal decision that should be made based on your unique financial needs and goals.
If you have extra money and want to earn higher interest than you’d get with a regular savings account, a share certificate can be a good option if you don’t need the money for paying your bills. If you know you’ll need your money to be readily available, a savings account or money market are probably better options.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

Get Started on Your Share Certificate Today!



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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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