CD Rates and Share Savings Accounts from Credit Unions

Certificates of deposit are a simple and safe way for investors to diversify their portfolios regardless of whether or not they have their money on deposit in a bank or through credit union. When using a credit union some common facts about CDs are:


  • Currently CDs backed by the NCUA offer $250,000 protection against loss
  • The current $250,000 insurance level of protection is temporary until the end of 2009 unless Congress votes otherwise
  • CDs are timed investments thus you know exactly when your money will once again become available
  • CDs can be cashed out before their maturity date for a fee or a penalty charge
  • CD rates work in direct correlation with the short term rates issued by the Federal Reserve
  • There is a guaranteed rate of return  for CD investments

Although credit unions tend to operate very similarly to banks in regards to CD rates, there are some differences. Credit unions offer share savings accounts that are very similar in nature to traditional bank savings accounts. However, those who utilize credit unions for their banking are considered “members”  or partial owners of the credit union, therefore their accounts are called share savings accounts. When you have invested in a credit union CD as a holder of a share savings account there are several ways you can tap into the interest earned including:

  • Have the interest funneled directly into an IRA account for retirement
  • Choose to have the interest add onto the current CD principal, opt into a new CD and then let the interest compound
  • Reallocate the interest paid into another investment tool such as your share savings account
  • The bank can issue you a check directly for the profits so you can spend the money however you please

When investing into a CD courtesy of a credit union, it is important to research all the terms of the deposit as they will fluctuate depending on the length of CD as well as other contributing factors.