Credit Union Share Certificates (CUSCs)

Consider adding a security with a fixed rate of return within a given time period to your portfolio.


Explore CUSCsLog In Required

What is a brokered CUSC?

A brokered CUSC is a share certificate issued by a credit union to brokerage firms for them to sell to their investors. CUSCs are usually issued in large denominations, then divided into smaller denominations when the firms sell them.

Advantages of CUSCs

Flexibility
CUSCs offer short-term maturities for frequent reinvestment and medium-term maturities for potentially more favorable rates.

Convenience
Consolidating them into one account can streamline purchasing and simplify management.

Insurance
Each CUSC is NCUA-insured up to $250,000 per issuer—increase total coverage by combining multiple issuers.1

Similarities to a brokered CD

Brokered CDs and CUSCs both pay a set interest rate that's usually higher than a regular savings account, both are debt obligations of an issuing institution, and both are insured up to $250,000 (per account owner, per issuer) by either the Federal Deposit Insurance Corporation (FDIC) for brokered CDs or the National Credit Union Administration (NCUA) for brokered CUSCs. Brokered CUSCs can also be purchased from different credit unions, which allows you to effectively increase your NCUA insurance protection above the $250,000 limit for a single account registration type (e.g., an IRA).1 

Differences from a brokered CD

Instead of paying interest like banks, credit unions distribute earnings in the form of dividends. These dividends are a way of sharing the credit union's profits with its members. While the distributed earnings are called dividends, they are taxed at the investor's ordinary income tax rate, just like interest from a brokered CD.

If a credit union fails, it's not mandatory for the NCUA to cover accrued (or earned but not yet paid) dividends. So, while accrued interest is covered by the FDIC for CDs, it may not be covered by the NCUA for CUSCs. Also, a credit union board may delay the issuer from paying out a dividend when there are insufficient earnings available after required reserves.

Compare features

  CUSCs CDs
New issue offerings Yes Yes
Secondary market offerings No Yes
Bid requests Yes Yes
Insurance NCUA* FDIC
Coupon payments Dividends** Interest
Structure Call Protected or Callable Call Protected or Callable, Step Rate
Trade sizes $1,000 par $1,000 par, Fractional CDs $100 par
Auto Roll No Yes
Bond & CD ladder tools No Yes
Trading on mobile app No Yes
* May not cover accrued dividends.
** A credit union may elect to delay a dividend when there are insufficient earnings available after required reserves. Taxed as interest.


View latest CUSC offerings

See which CUSCs are currently available at Fidelity to purchase and add to your portfolio.


Explore CUSCsLog In Required

Risks of CUSCs

  • Coverage limits

    NCUA insurance only covers the principal amount of CUSCs up to the applicable coverage limits. NCUA insurance limits apply to aggregate amounts on deposits, per account, at each covered institution. For more information, visit www.ncua.gov.

  • Lower yields

    Because of the inherent safety if held to maturity and short-term nature of a credit union share certificate investment, yields on CUSCs tend to be lower than other higher-risk investments.

  • Call risk

    The issuer of a callable CUSC maintains the right to redeem the security on a set date prior to maturity and pay back the CUSC's owner either par (full) value or a percentage of par value. The call schedule lists the precise dates for when an issuer may choose to pay back the CUSCs and the price.

  • Interest rate fluctuation

    Like all fixed income securities, CUSC valuations and secondary market prices are susceptible to fluctuations in interest rates. If interest rates rise, the market price of outstanding CUSCs will generally decline, creating a potential loss should you decide to sell them in the secondary market. Changes in interest rates will have the most impact on CUSCs with longer maturities.

  • Selling before maturity

    CUSCs sold prior to maturity are subject to a mark-down2,3,4 and may be subject to a gain or loss due to interest rate changes and other factors. In addition, the secondary market value of a CUSC may be influenced by a number of factors including, but not limited to, interest rates, provisions such as call or step features, and the credit rating of the issuer. Fidelity can help investors who want to sell their brokered CUSCs before maturity by using our Bid Request system.

  • Credit risks

    Since CUSCs are debt instruments, there is credit risk  associated with their purchase (insurance offered by the NCUA may help mitigate this risk). Customers are responsible for evaluating both the CUSCs and the creditworthiness of the underlying issuing institution.

  • Dividend payment risks

    Unlike CD interest, a credit union board may prohibit the issuer from paying out a dividend when there are insufficient earnings available after required reserves.

  • Insolvency of the issuer

    If the issuer approaches insolvency or becomes insolvent, the CUSC may be placed in regulatory conservatorship, with the NCUA typically appointed as the conservator. As with any deposits placed in conservatorship, the CUSCs of the issuer for which a conservator has been appointed may be paid off prior to maturity, or they could be transferred to another institution. This could offer the choice of retaining the CUSC at a lower interest rate or receiving payment. 

Other considerations

While you can set up Auto Roll service for your individual CD and Model CD ladder purchases, there's currently no equivalent Auto Roll service for CUSCs. However, you can sign up for the Bond/CD Redemption alert available in Fidelity's Fixed Income Holdings alerts to get timely notifications as you prepare for future investment decisions. While there are brokered CDs available for purchase in the secondary market on Fidelity's website, Fidelity does not currently offer CUSCs for purchase on the secondary market. 

If the original investor is deceased or permanently incapacitated, a survivor's option allows the estate of a deceased investor to redeem both principal and accrued dividends without penalty. CUSCs with a survivor's option can generally be redeemed for par value. For more information on survivor's options, or to learn more about survivor's option limitations, please call Inheritor Services at (800) 544-0003.