Key takeout
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A CD and stock certificate are almost identical, fixed-term deposit accounts that earn guaranteed returns over a set period.
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The main difference is that the CD is provided by the bank and pays interest. The stock certificate is provided by the credit union and pays dividends.
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Both have federal insurance up to $250,000 per depositor (FDIC on CDS, NCUA on stock certificates).
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Credit unions often offer slightly higher rates than traditional banks, but online banks often compete with the highest rates.
Both certificates of deposit (CD) and certificates of stock are low-risk deposit accounts where your money can grow at a fixed interest rate. The main difference between them is that CDs are products offered by commercial banks, while stock certificates are provided by member-owned non-profit credit unions.
Understanding the differences can help you choose the right option for your savings goals and decide whether joining a credit union will help you with your overall financial strategy.
Differences between CDs and shared certificates
| Features | CD | Share certificate |
|---|---|---|
| institution | Provided by the bank | Provided by a credit union |
| Revenue | Pay interest | I’ll pay dividends |
| insurance | Insurance by FDIC | Insurance by NCUA |
| Membership | No membership required | Credit union membership required |
| Fee | It depends on the type of bank | Many are competitive for profit sharing |
| Accessibility | Widely available | Limited to eligible members |
What is a deposit certificate?
A CD is a type of bank account that opens at a specified time and earns interest at a guaranteed rate. Generally, account owners are not allowed to withdraw principals from their accounts until the terminology on the CD has ended. Otherwise, you will face an early withdrawal penalty.
Key features of the CD:
- Fixed interest rates for the entire period
- Conditions usually range from 3 months to 5 years
- FDIC insurance up to $250,000 per depositor, by ownership category, by institution
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Various types available (penalty, bump up, step up CD)
CDs are perfect for savers who have a specific timeline for their money and want guaranteed returns without risk of market risk.
What is a stock certificate?
Stock certificates, sometimes called Credit Union CDs, are roughly the same as CDs, except that they are provided by Credit Union. The earnings on a stock certificate are called dividends rather than interest.
Because credit unions are non-profit institutions, profits are distributed in the form of dividends between members who are essentially shareholders of the credit union. This structure allows credit unions to offer higher or lower rates than traditional banks.
Key features of stock certificates:
- Fixed dividend rate for the entire period
- Terminology length similar to bank CDs
- Up to $250,000 per NCUA insurance depositor, by ownership category, by institution
- You must open a credit union membership
Check out the best one-year credit union CD rates.
Who should get a stock certificate and CD?
The choice of stock certificates and CDs often depends on the bank’s preferences and access to credit union membership. This is compared side by side:
| CD is best if you: | A stock certificate is best if you: |
| – The widest selection of engines and products is required – Prefer banking with traditional or online banking – Convenience of extensive branch locations is required – Compare prices easily at many institutions – Do not meet credit union membership requirements – I prefer the simplicity of not requiring membership |
– qualifies for credit union membership – We value-focused banks – Potentially high fees are required to share profits -Populate lower fees and member benefits – We need to provide feedback on how the facility is operated. – The value of personalized customer service |
Compare the best CD rates today →
Do I need to join a credit union?
To open a stock certificate, you must first be a member of the credit union that provides them. Credit unions often need to meet membership requirements to serve a particular community, geographical area, employee type, or association.
Benefits of joining a credit union:
- Lower fees and higher yields: As profits are shared among members, more money is noted in the form of dividends and lower fees.
- Community-centric approach: Credit unions usually have shared commonalities with their members and are committed to supporting the community.
- Member Ownership: All members have the right to vote on credit union ownership and governance decisions.
- Personalized services: Smaller sizes often mean more personalized customer relationships.
If you’re interested in joining a credit union, check out Bandrate’s Best Credit Union and our guide to choosing the right union for you.
Alternatives to Sharing Certificates and CDs
If you want more flexibility than CDS, or more flexibility than the certificate offers, consider these options.
- High-yield savings account: Get competitive fees with full liquidity and early withdrawal penalties
- Money Market Account: Combining high rates with limited check writing and access to debit cards
- Ministry of Finance’s Invoice: Government-supported securities on a 4-week-1 year condition
- I’ll be connected: Inflation protection savings bonds adjust fees based on inflation: Inflation protection savings bonds
- Penalty CD: Earn CD-like fees with the ability to withdraw funds without penalties
When to consider alternatives: Standard CDs and stock certificates are ideal for specific savings targets on known timelines. However, early withdrawals usually result in fines, making them not ideal for emergency funds or money that require access.
For funds that require more liquidity, a high-yield savings account offers competitive rates that allow you to fully access your money. The current highest savings rates are often similar or even greater than some CD rates.
Compare high yield savings accounts →
Conclusion
Whether you choose a CD or a Charge certificate depends primarily on the institution’s preferences and eligibility for credit union membership. Both offer guaranteed returns and federal insurance protection, and provide superior low-risk saving options.
If you’re looking for the highest yield, shop and compare offers from traditional banks, online banks and credit unions. Credit unions often offer competitive rates and additional member benefits, while online banks often offer some of the best CD rates on the market.
Are you ready to earn more about your savings? Find the best CD rates today →
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