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A young woman doing research on her laptop about how to open a share certificate.

How to Open a Share Certificate (5 Simple Steps)

Share certificates are popular options that many use to grow their savings. They are safe investments that offer set returns and different terms are available to meet your needs. The steps to open a share certificate are easy to follow and it just takes a few minutes to get started.

How Do Share Certificates Work?

A share certificate is a type of investment that is offered by credit unions (called CDs or Certificates of Deposit at banks and other financial institutions). Similar to a savings account or money market account, the money you invest grows through the compounding of interest. Share certificates are different from these accounts, however, in two important ways: access to your money and the interest rate.

When you open a share certificate, you’ll select the date that it ends –  which is referred to as the maturity date. A share certificate maturity date could be as little as three months or as long as six years. Unlike a savings account or money market account, you do not have access to the money you invest until the maturity date. If you withdraw money from a share certificate before the maturity date, you’ll be assessed an early withdrawal fee. Make sure you review your disclosure for details.

Share certificates also tend to earn more interest than savings accounts or money market accounts. Share certificates with longer maturity dates usually have higher interest rates. Share certificates also usually have low or no fees, which means you can keep the majority or all of the interest you earn.

An important benefit of a share certificate is that you’ll earn a predictable return on your investment. Because the interest rate is locked in when the account is created and won’t change, you can determine how much you’ll earn before you invest your money.

Share certificates are also very safe. Your investment is backed by the federal government for up to $250,000. If it’s with a bank, it’s guaranteed by the Federal Deposit Insurance Corporation (FDIC). If it’s with a credit union, it’s guaranteed by the National Credit Union Administration (NCUA).

How to Open a Share Certificate Account

Opening a share certificate is a simple and quick process. Most financial institutions will allow you to do it either online or in person. The following steps outline the process.

1. Evaluate your Options

Before you open a share certificate, it’s important to determine which product best fits your needs. NextMark offers various certificates at different terms. 

Credit unions usually offer share certificates with higher interest rates than banks. This is because credit unions are cooperative financial institutions where members are part owners. Their deposits are what is used to make loans. Unlike banks, they don’t have to worry about earning a profit for their investors.

2. Select the Right Share Certificate

It’s important to consider the current market before opening a share certificate. If you believe rates will soon rise, a share certificate with a short maturity date will allow you to reinvest your money at a higher rate in the near future. If you invest in a long-term share certificate and rates increase, you could miss out on earning more money.

3. Have Your Personal Identification Available

If you are new to NextMark, you will need to provide two forms of ID to open an account. You may use a driver’s license, Social Security card, or passport, for example. If you’re a current member, you can open the share certificate as an “existing member” on the application platform.

4. Open Your Account

A share certificate account can be opened in just a few minutes by filling out and submitting an application. With NextMark Credit Union, you can apply in person at a branch location, online, or by phone.

5. Fund the Share Certificate

After your account is established, you can fund it by transferring money from a NextMark account, or an account you have with another Financial Institution. This can be done online through a fund transfer, a wire transfer, or by check.

When Should You Invest in a Share Certificate?

Share certificates are best for when you want to grow your investment and you know that you won’t need to access your money until the maturity date. They are ideal for a variety of things.

If you would like to buy a home in Stafford County, for example, you could use a share certificate to help save for a down payment. If your down payment is at least 20% of the purchase price of your home, you may not be required to carry PMI on your mortgage, which could save money. Also, the less you have to borrow, the more you can save on interest over the life of your home loan.

As car prices rise in the Northern Virginia area, a share certificate may also be a good option to save for a car down payment, which can lower your monthly payments. Saving for a car can sometimes be difficult, especially when you’re tempted to use some of your savings to buy something else. 

With a share certificate, you won’t be able to withdraw money without incurring a penalty, which may help you reach your savings goals.

Share Certificates With NextMark

If you’re thinking about opening a share certificate, NextMark offers options with competitive interest rates. Flexible terms of 3-72 months are available.

While most share certificates don’t allow you to add additional funds after your account is established, NextMark offers a 36-month Savings Builder Certificate that gives you the freedom to continue adding money as you have access to it. You can get started with a minimum deposit of $100 and continue adding money throughout the term. This makes it a great option for saving for something you want to buy.

Click below to learn more about our Savings Builder Certificate.


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