The Update

Is this a Good Time to Open a Share Certificate?

A share certificate is a savings account that boasts of a fixed earnings rate for a fixed date of maturity, or term. The dividend rates of these accounts are usually higher than those on savings accounts, but access to the funds is more limited. Most certificates will not allow the account owner to add any 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 interest 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 an RGCU Share Certificate.

High Interest 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 interest rate. According to the FDIC, interest rates on traditional savings accounts hover at 0.40%, while rates for certificates average from 4-5%, or even higher. At Rio Grande Credit Union, we offer a variety of different term options with great rates of return. Visit our certificates page to learn more.

Reliable Interest Rates

Most high-yield accounts have variable interest rates that fluctuate along with the national rate. Rates for share 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 share certificates makes them a great choice for investors.

Safety and Security

The security of your funds is always a priority. Investors are looking for ways to protect their funds from market fluctuations and other forms of instability, so a share certificate gives them the security they need. Also, certificates at Rio Grande are federally insured by the National Credit Union Administration, up to $250,000.

No Access to Your Funds

The general lack of accessibility inherent with share 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 share 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 share certificate may not be a good choice for you at this time.

RGCU Share Certificates

If you're interested in an RGCU Share Certificate, stop by one of our branches to learn more. We are here to answer any questions you have, and help you understand the financial options available as a member of Rio Grande Credit Union.