Budget and Save

Earn Money Without Doing a Thing: Share Certificates Explained

Erin Palmer

July 13, 2018

A fictional representation of how you earn money with a share certificate

As a child, you might have been told “money doesn’t grow on trees.” And even though you knew that was true, the idea of planting a money tree still sounded amazing, right?

While we may not have any money tree seedlings, we do offer a way to let your existing money grow into more money. Best part? You don’t have to do anything but let your funds grow!

Let’s break down what a share certificate is and how it can help you earn more money without doing a thing.

What is a Share Certificate?

A share certificate is a method of saving money. It’s similar to a certificate of deposit (CD) that many banks offer.

Share certificates are different from a regular savings accounts because the money stays in the account for a specific amount of time. This amount of time is called the term.

Share certificates often yield higher returns than a regular savings account, which means your money can grow more over time.

Some share certificates have fixed rates and others have variable rates. A fixed rate share certificate means that the rate will remain the same throughout the term of the account. A variable rate share certificate means that the rate may vary depending on the specific terms of the account.

How Do Share Certificates Work?

Share certificates are offered for a set time period. When you choose a share certificate, you should plan on keeping your money in the account for the entire time period or you may be penalized. They may require a specific initial deposit and a minimum balance.

The basic idea behind share certificates is that the accounts with longer terms have higher dividend rates. So if you are looking for short-term savings, you can open a 6-month share certificate. But if you plan on a longer term, like a 12-month share certificate, the dividend rate will be higher.

Share certificates with longer terms, like 60-month certificates, can have especially strong dividend rates. So as long as you don’t take the money out before the term is up, your money will grow without you needing to do a thing!

What Does APY Stand For?

For share certificates, APY stands for annual percentage yield. It indicates how much you will earn on deposits over a year. So it’s similar to an APR (annual percentage rate) on a loan, but you earn money instead of owe money!

Each specific type of share certificate will have its own APY. The longer the term in months, the higher the APY will likely be.

Bottom Line: Share Certificates Make It Easy to Save

If you want your money to grow over a set amount of time, share certificates are an excellent choice. Open the account, keep the money in there during the term and watch your savings grow!

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