What Exactly is a Certificate Account at a Credit Union?

Are you looking for ways to grow your money without taking on a financial investment risk? A certificate of deposit (CD) might be a great option to consider. So what is a certificate account at a credit union? A certificate account is a low-risk investment that offers higher interest rates than a regular savings account.

Woman smiling holding coins over piggy bank after researching what is a certificate account at a credit union

What are the benefits of a CD?

  • Guaranteed returns: Compared to savings accounts, certificates provide a higher interest rate. The rate is also fixed, allowing you to know exactly how much you'll earn from your investment. This is a safe way to effectively invest your money for a designated period or “term.”
  • Insured investment: Like a checking and savings account, money in a CD is also insured with your financial institution. This makes them one of the safest ways to invest and grow your money. Make sure you check to see how much coverage the financial institution provides per account or per person.
  • Flexibility: CDs make a good option for people who are looking to save for both long periods of time, and very specific amounts of time. For example, a child’s education or a down payment on a house can provide an estimate of time to select for your CD. When you open a CD, you can decide if you want to leave your money in the account for six months or up to five years.

How do CDs work?

Most financial institutions require a minimum deposit of $500+ to open a CD. Once you open your CD, you agree to leave your money in the account for the duration of the term period you selected. If you need to withdraw the money before the term ends, you will typically pay an early withdrawal fee. This fee may amount to the interest earned while the CD was opened or more.

It’s also important to remember that most certificates only allow a deposit of money at the beginning of the term and cannot receive additional contributions throughout the term period. Upon maturity, additional deposits are accepted if you choose to renew the CD.

Bottom line

CDs are a great low-risk investment for those people who have extra money outside of their emergency fund. Before you decide to open a CD, it is always a good idea to compare different savings options and interest rates to find the account that best meets your needs and financial goals.

CCCU offers both competitive fixed rates and flexible CD terms that guarantee a higher return than a regular savings account. Visit the CCCU Certificate of Deposit page to learn more about current CD terms and promotional rates.