What is a Share Certificate?

What is a Share Certificate?
Article Financial Two Cents

Also known as a Certificate of Deposit (CD), a Share Certificate is focused on your savings goals.

Definition

A Share Certificate offers you a way to earn higher dividends by locking your funds in for a set term.

How does it work?

A share certificate allows your money to work for you while you earn more in the form of dividends. You can select the term you want, generally ranging from 6 months to 5 years. The dividend rate you’ll earn is different based on the term that you choose, generally earning more when you lock your funds in for a longer amount of time.

Most financial institutions have a minimum deposit that you will need to open a Share Certificate. For HFS, that minimum is $2,500. Check with your institution to see what their minimum deposit is. The Annual Percentage Yield that you will earn is locked in for that term once you open your Share Certificate and cannot change while your funds are locked. Remember, you aren’t able to access these funds during this time so if you think you may need it, perhaps a Savings Account is a better option for you.

What happens if I need to access the money in my Share Certificate?

Although you do have the option of ending your Share Certificate sooner should you need to, keep in mind that in most cases there are penalties or fees for doing this. As mentioned above, if you think for any reason you’ll need to access the funds, it may be safer to either not open a Share Certificate or to choose a shorter term instead. You’ll want to speak to a representative from your financial institution to find out the specifics on what the penalties or fees would be for having to close your certificate early.

A Share Certificate is a great tool for those looking to increase their savings potential with very little effort. Remember to pay attention to the rates and terms to decide what fits best for you and pay attention to what the penalties are if you need to close your certificate before the term ends. Happy Saving!

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