A CD, or certificate of deposit, at a credit union is much like a CD at a bank. It allows you to deposit money for a fixed period of time, such as six months or five years, and earn guaranteed interest in return.
Most credit unions call CDs “share certificates” because they represent your share of the credit union’s ownership, but share certificates are identical to CDs. Like banks, credit unions offer different interest rates on certificates depending on the length of time you commit your funds.
Longer terms can offer higher rates, but this isn’t always the case. If financial institutions suspect that the Federal Reserve will lower rates in the near future, they may offer higher rates on shorter terms now and then adjust them to a lower APY once rates start falling.
Credit union CDs pay the same APY for the full term you select. If you withdraw money before the maturity date, early withdrawal penalties may apply. Once your CD matures, you usually have a “grace period” where you can make changes to your CD or withdraw funds before it renews for another term.