Share certificate vs. certificate of deposit: What’s the difference?
Understanding how CDs and share certificates compare can help you decide which type of institution (bank or credit union) aligns better with your savings goals.
Key takeaways
CDs and share certificates function similarly, offering fixed returns over a set term in exchange for locking in your funds, but are not the same thing.
The main difference lies in the issuing institution: CDs are offered by banks and pay interest, while share certificates are issued by credit unions and pay dividends. Raisin allows you to easily compare rates between both products.
Both are insured up to $250,000 per depositor, per ownership category, per insured institution (FDIC for banks, NCUA for credit unions), making them low-risk options for savers seeking predictable growth.
What is a certificate of deposit?
A certificate of deposit (CD) is a type of time deposit offered by banks, meaning you deposit a lump sum of money and leave it untouched for a predetermined period of time (also known as a CD term), and in return you earn a fixed amount of interest, which is generally higher than traditional savings accounts. However, if you need to access your funds before the CD matures, you will owe an early withdrawal penalty (exceptions apply for no-penalty CDs).
Key features of a CD include:
Typically offer fixed interest rates for the entire term
Terms generally range from a few months to five years or more
Different CD types to meet your needs (e.g., no-penalty, add-on CD, bump-up CD, callable CD)
- FDIC insurance up to $250,000 per depositor, per ownership category, per institution if bank is insured
Advantages and disadvantages of certificates of deposit
Before locking your funds away, here are some pros and cons to consider with CDs:
Pros of CDs
CDs typically offer fixed returns through guaranteed interest rates for the duration of the term, providing predictable earnings.
Funds are generally insured by the FDIC, making CDs a relatively low-risk investment.
A variety of term lengths allows depositors to match terms with their savings goals.
CD rates are often higher than those of traditional savings accounts.
Cons of CDs
Your funds are locked in for the duration of the term, reducing your liquidity.
If market interest rates rise after opening a CD, the locked-in rate may become less favorable.Accessing your funds before maturity results in an early withdrawal penalty.
What is a share certificate?
Share certificates are essentially the credit union equivalent of a CD. They generally operate the same way (with fixed terms and early withdrawal penalties); however, rather than earning interest, earnings on share certificates are called dividends. Since credit unions are not-for-profit institutions, earnings are distributed among members (or shareholders) in the credit union in the form of dividends. Because of this structure, credit unions may sometimes offer higher rates or have lower fees compared to traditional banks.
Key features of share certificates include:
Fixed dividend rates for the duration of the term
Terms ranging from a couple of months to five or more years
Credit union membership required to open a share certificate
- If the credit union is insured, funds are protected by the NCUA Share Insurance Fund (similar to FDIC) up to $250,000 per depositor, per deposit-ownership category, per institution
Advantages and disadvantages of credit union share certificates
Like CDs, share certificates offer a savings option for those who don’t need immediate access to their funds. Here are some pros and cons to consider:
Pros of share certificates
Interest rates are typically higher than traditional savings accounts and may potentially exceed bank CD rates
Fixed rates throughout the term provide predictable returns
NCUA deposit insurance coverage makes credit unions a generally low-risk investment option
Cons of share certificates
Accessing your funds before maturity may lead to penalty fees, meaning your liquidity is restricted
If overall interest rates rise after opening your certificate, you may miss out on potentially higher rates
- Because it is a low-risk investment, share certificates might result in lower yields than riskier investment options
Bank
Product
APY
Maturity
Raisin is not an FDIC-insured bank or NCUA-insured credit union and does not hold any customer funds. FDIC deposit insurance covers the failure of an insured bank and NCUA deposit insurance coverage covers the failure of an insured credit union.
CD vs. share certificate: Key similarities and differences
When comparing share certificates vs. CDs, it’s important to note the differences, although they may seem very similar. Here’s a side-by-side overview:
Feature | Certificate of deposit (CD) | Share certificate |
Institution type | Offered by banks | Offered by credit unions (membership required) |
Insurance coverage | FDIC insured up to $250,000 per depositor, per bank | NCUA insured up to $250,000 per depositor, per credit union |
Interest/dividend structure | Typically, pays fixed interest | Pays dividends (functionally similar to interest) |
Term length options | Ranges from short-term (1–6 months) to multi-year | Similar range of term options |
Early withdrawal penalties | Penalties apply for accessing funds before maturity | Penalties also apply; structures may vary slightly |
CD vs. share certificate: Which option is right for you?
Share certificates and CDs are similar fixed-term savings products, with the main difference being where they are offered. When choosing between a share certificate vs. CD, you might first want to consider what type of financial institution you prefer (bank vs. credit union), as well as your financial goals and liquidity needs. While banks tend to offer broader product access, credit unions might deliver a more personalized experience. Comparing interest rates could also help you find an offer that fits your needs.
Here are some factors to consider when deciding between share certificates vs. CDs:
Annual percentage yield (APY): Comparing interest rates and APY could help you decide what product and bank to choose.
Term length: Consider how long you are willing and able to lock your funds away. You may want to use a platform like Raisin to compare the different term lengths offered at credit unions vs. banks.
Minimum deposit: Consider if the required minimum deposit fits your budget. Products offered on Raisin only require a $1 minimum deposit.
CDs and share certificates to help grow your savings
CDs and share certificates operate almost identically, with the key distinction being whether you prefer a bank or a credit union experience. Both options offer fixed, insured returns and are designed for savers willing to trade liquidity for stability. Comparing APYs, terms, and accessibility between financial institutions can help you find the best fit for your savings strategy.
Ready to get started? Raisin is here to help. The Raisin marketplace allows you to easily compare savings products like CDs, certificates, and more, to help you find what best suits your savings needs. Explore account types, compare rates, and sign up today to start maximizing your savings potential!
FAQs on share certificates vs. CDs
Are share certificates as safe as CDs?
Yes — as long as the credit union is NCUA insured, share certificates carry the same level of protection as FDIC-insured CDs, up to $250,000 per depositor, per institution.
Do credit unions pay more interest on share certificates than banks do on CDs?
Credit unions may sometimes offer slightly higher dividend rates compared to bank CD interest rates, but it varies by institution and market conditions. It’s worth comparing current offers rather than assuming one is always higher.
Can you lose money in a share certificate?
Your principal is protected if the credit union is NCUA insured and you hold the certificate to maturity. However, withdrawing early can result in penalties that may reduce your earnings.
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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*APY means Annual Percentage Yield. APY is accurate as of May 20, 2026. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected. Minimum opening deposit is $1.00.
Raisin is not an FDIC-insured bank, and FDIC deposit insurance only covers the failure of an insured bank.
Raisin is not an NCUA-insured credit union. NCUA deposit insurance only covers the failure of an insured credit union.
Raisin does not hold any customer funds. Customer funds are held in various custodial deposit accounts. Each customer authorizes the Custodial Bank to hold the customer’s funds in such accounts, in a custodial capacity, in order to effectuate the customer’s deposits to and withdrawals from the various bank and credit union products that the customer requests through Raisin.com. The Custodial Bank does not establish the terms of the bank or credit union products and provides no advice to customers about bank or credit union products offered by the applicable bank or credit union through Raisin.com. Each customer also authorizes the Service Bank to move funds among the various banks and credit unions at the customer’s request. First International Bank & Trust (FIBT), Member FDIC, is the Service Bank. Bell Bank and Starion Bank, each Member FDIC, are the Custodial Banks.
†Based on $250,000 in FDIC or NCUA insurance coverage per insurable category of ownership at each partner bank or credit union on the Raisin platform (each a "Product Bank"), when aggregated with all other deposits held by you at such Product Bank and in the same insurable category. Deposits made through Raisin will be eligible to receive deposit insurance from the FDIC or the NCUA (each a "Deposit Insurer") in accordance with and up to the maximum amount permitted by law at each Product Bank. Raisin is not a bank or credit union and does not hold any customer funds. Funds are held at FDIC-insured banks and NCUA-insured credit unions. Deposit insurance covers the failure of an insured bank or credit union. Certain conditions must be satisfied for pass through deposit insurance coverage to apply. Customers may choose to deposit funds with identically registered accounts at different Product Banks on the Raisin platform to be eligible for Deposit Insurer coverage up to $10 million for individual accounts and $20 million for joint accounts when at least 40 Product Banks are utilized. Please be aware, however, that any deposits you have at a Product Bank, whether through the Raisin platform or outside the Raisin platform, that you may hold in the same capacity (such as in an individual capacity or joint capacity) count toward the applicable Deposit Insurer's deposit insurance maximum amount, and any such amounts that you hold in the same capacity at a Product Bank that exceed the maximum insurance coverage by the applicable Deposit Insurer will not be insured. For more information on FDIC deposit insurance, please see here. For more information on the NCUA share insurance fund, please see here. You are solely responsible for monitoring the amount of funds you have on deposit at each a Product Bank, whether through the Raisin platform or outside the Raisin platform, to confirm that the deposits you hold in the same capacity at each Product Bank do not exceed the maximum deposit insurance coverage provided by the applicable Deposit Insurer.