Certificates of deposit (CDs) or share certificates are offered by both credit unions and banks. CDs work by offering fixed interest rates or dividends when you agree to leave a lump sum investment untouched for a set period of time — typically anywhere from six months to five years.

Generally speaking, long term CDs or longer term certificates offer higher dividend annual percentage yields (APYs). There is usually a penalty for withdrawing funds early.

Unlike savings accounts, where your money is typically instantly available, CDs require you to commit your money for a set term length. You are then paid back your deposit plus earnings when the CD reaches its maturity date. Generally, CDs offer a significantly higher dividend or interest rate than savings accounts, but also usually require a significantly higher minimum deposit compared with a savings account.

Yes, there is a minimum initial deposit to open a CD. This minimum balance can be as low as $500 but varies with the certificate’s term and dividend rate.

Yes, you can withdraw funds from a CD or certificate account before it matures, but you will usually face penalties. These can include fines, loss of earnings, or even having your CD account converted to a regular savings account.

Yes, CDs or certificate deposits at credit unions are federally insured in the same way as regular deposit (savings and checking) accounts. Your deposits and dividend or interest earnings are insured up to $250,000 per account by the National Credit Union Administration (NCUA).