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Inflation-Proof Your Savings: The Role of Share Certificates

March 23, 2024 | Modified: March 26, 2024

Inflation is a silent wealth killer, steadily eroding the purchasing power of your hard-earned savings over time. As prices rise, the value of your money diminishes, making it essential to find strategies to protect your wealth from this relentless force. One such strategy is the use of share certificates. Let’s learn how these financial instruments can serve to inflation-proof your savings.

Understanding Share Certificates

Share certificates are time deposits offered by credit unions. They typically offer higher interest rates in comparison with regular savings accounts in exchange for locking in your money for a specified period, making them an attractive option for those seeking a guaranteed return on their savings.

The Role of Fixed-Rate Certificates

Fixed-rate share certificates are particularly noteworthy when it comes to combating inflation. Unlike savings accounts, where interest rates can fluctuate, fixed-rate certificates offer a stable return for the duration of the term, shielding your savings from interest rate volatility. This stability is crucial in an inflationary environment where maintaining the purchasing power of your savings is paramount.

Short-Term Certificates: 3, 6, and 12 Months

While share certificates are available in various terms, including longer durations like two to five years, let’s focus on shorter-term certificates ranging from three to twelve months. These shorter terms offer flexibility and liquidity while providing a reliable hedge against inflation. You’ll be comfortable knowing your money is safe and secure while working for you. 

  • 3-Month Share Certificates: A 3-month share certificate provides a quick turnaround for investors who want to take advantage of rising interest rates or safeguard against short-term inflationary pressures. It’s a perfect option if you have a lump sum of money sitting in traditional savings that you will need to access in a few months. While the rates for short-term certificates at most financial institutions may not be as high as their longer-term counterparts, they still offer a competitive yield compared to traditional savings or checking accounts. 
  • 6-Month Share Certificates: With a 6-month share certificate, investors strike a balance between liquidity and earning potential. This term allows for slightly higher interest rates compared to 3-month certificates while still offering the flexibility to reassess investment opportunities or adjust strategies in the relatively near future.  If you are searching for a more competitive rate on a short-term certificate, Benchmark FCU has a limited time short-term certificate special that you won’t want to miss. Visit the nearest Benchmark FCU branch or submit a Certificate Request easily online to take advantage of these limited-time rates. 
  •  12-Month Share Certificates: A 12-month share certificate provides a longer investment horizon, allowing investors to lock in higher rates. While committing to a full year may seem daunting for some, the stability and predictability of returns can outweigh the temporary loss of liquidity. View all certificate terms and rates easily online at Benchmark FCU.  

 Inflation-Proof Your Savings

The essential advantage of these fixed-rate share certificates, regardless of term length, is their ability to hedge against inflation. By locking in a guaranteed rate of return, investors can sustain the purchasing power of their savings and combat inflation over time. This is especially crucial in today’s economic climate, where inflationary pressures are growing.

Considerations and Risks

While share certificates offer numerous benefits, it’s essential to consider potential drawbacks and risks. One such risk is the opportunity cost of tying up funds in a certificate, particularly if interest rates rise significantly during the term. Additionally, early withdrawal penalties may apply if you need to access your funds before the certificate matures. Benchmark FCU’s Short-Term Certificate Special is an excellent option for enjoying a competitive rate while not tying your money up for years.  

Are Short-Term Share Certificates Right for You?

Inflation is a persistent threat to the value of your savings, but fixed-rate share certificates provide a viable solution to mitigate this risk. By locking in competitive rates for terms ranging from 3 to 12 months, investors can defend their savings against the depletion of inflation while still maintaining flexibility and liquidity. Whether seeking short-term gains or long-term stability, share certificates offer a compelling option to inflation-proof your savings and achieve your financial goals.

Read more about certificates in our blog article “Laddering Certificates: A Dynamic Approach to Combat Inflation.” 


The information on this website is provided for general informational purposes only and is not intended as financial advice or a recommendation. It should not be relied upon for making financial decisions. We strongly advise consulting with a professional financial advisor before taking any action based on this content. We do not guarantee the accuracy, completeness, or usefulness of this information and will not be liable for any loss or damage resulting from your reliance on it. Use of this site constitutes acceptance of this disclaimer.

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