FAQ- SHARE CERTIFICATES
• What is the Annual Percentage Yield?
The Annual Percentage Yield (APY) is a percentage rate that reflects the total amount of dividends to be paid on an account over an entire year. It is based on the dividend rate and frequency of compounding.
• Can I make additional deposits into my CD/share certificate?
Yes, you can make additional deposits into your CD/share certificate. However, the dividends for these additional deposits will be calculated at the current rate of that week and NOT the rate in effect when the certificate was opened.
For all accounts, dividends are calculated by the daily balance method, which applies aperiodic rate to the balance in the account each day. This can be done at the Main Branch and also the Hermantown Branch. CD rates change on Wednesdays.
• Should I purchase more than one share certificate/CD?
One of the most effective ways to maximize your investment in share certificates (often called certificates of deposit) is called "laddering." Laddering is a way to stagger the maturity dates of your share certificates. For example, you could buy a one-year, a two-year and a three-year share certificate. As each CD matures, you would reinvest, buying longer term certificates, usually five-year share certificates. This strategy is aimed at having some portion of your certificate portfolio maturing each year. This is not only beneficial from a liquidity standpoint, but it also provides interest rate risk benefits.
If all of your money is tied to one share certificate and the rates are low when it matures, you'd be faced with renewing it at a low rate. With laddering, you're more likely to avoid investing at the bottom. To purchase a share certificate from MPECU, please contact us!
• How much money can I invest in your CD/share certificates?
The minimum deposit is $500.00. There is no maximum amount.
• What happens if I need to cash in my CD/share certificate early?
In most cases, you will incur a penalty if you withdraw funds from your CD before the maturity date.
If the term of your CD is 1 year or less, the penalty is 90 days' worth of dividends.
If the term of your CD is longer than 1 year, the penalty is 180 days' worth of dividends.
You could potentially lose part of your principal if the CD has not yet earned enough dividends to equal the penalty amount.
There are exceptions to the early withdrawal penalty:
Death of the account owner
If the certificate is part of your IRA, there may be special circumstances that would allow early withdrawal of your funds without a penalty.
• Is my money safe in a CD/term share certificate? What are the risks?
Yes, our CDs/term share certificates are NCUA (National Credit Union Administration) insured.
The only risk you may assume with a certificate is an early withdrawal penalty if you need to take out your money before the certificate matures.
• Do you offer IRA Share CD’s?
We offer Traditional and Roth IRA share CD's. The terms are 6, 12, 18, 24, 36 and 60 months. They can be set up for single maturity or to automatically renew at maturity. Please contact the credit union for the current rates. These can also be purchased at the Branch Office.
Note that MOR rates only apply to IRA certificates and not IRA share accounts.
• What types of certificates of deposit (CD’s) or share term certificates does MPECU offer?
MPECU offers a wide variety of Share Term Certificates based on structured tiers that allow you to pick the length of time and the amount you are investing. MPECU also bases rates off of your Member Owner Reward (MOR) levels.
• Do you offer CD/share term certificates with a variable interest rate?
MPECU does not offer variable-rate certificates. We offer fixed-rate certificates with rates based on the term and amount of the certificate. Your certificate rate may be higher depending on your Member/Owner Rewards (MOR) level.
• How do CDs/share certificates work?
When you purchase a CD/share certificate, you invest a fixed sum of money for a fixed period of time (or term) – three months, six months, one year, eighteen months, two years, or more – and, in exchange, we pay you interest, typically at regular six month intervals or at the end of the certificate’s term. When your certificate matures, you will receive the money you originally invested plus any accrued interest. But if you redeem your certificate before it matures, youmay have to pay an early withdrawal penaltyor forfeit a portion of the interest you earned.
The penalty for early withdrawal is as follows:
Terms of 1 year or less - 90 days dividends
Terms of longer than 1 year - 180 days dividends
The penalty is calculated as a forfeiture of part ofthe dividends that have been or would be earned on the account. It applies whether or not the dividends have been earned. In otherwords, if the account has not yet earned enough dividends or if the dividend has already been paid, the penalty will be deducted from the principle.
• Can I purchase more than one CD/share certificate?
Yes, you can purchase as many CD/term share certificates as you want. The minimum balance required for a CD/term share certificates is $500. Certificate rates change weekly so please contact the credit union for the current rate.
• What index are your CDs/Share certificates based on and how frequently does the rate change?
We base our certificate rates off our US Treasury fixed certificate rates. Our certificate rates change weekly on Wednesday.
• How often do your CDs/share term certificates pay interest?
For term share certificates lessthan six months the dividend (interest) is paid at maturity. For term share certificates six months and over the dividend (interest) is paid semi annually.
• What is a certificate of deposit or term share certificate and why should I invest in one?
A certificate of deposit or term share certificate is a deposit made for a set length of time and typically offers a higher rate of interest than a regular share/savings or share draft/checking account.
A certificate of deposit is a safe investment with a guaranteed rate of return. All certificates of deposit or term share certificates are NCUA insured.