A share account is a savings account at a credit union, not a checking account

Credit unions call their savings accounts share accounts because members own a share of the credit union itself. The account works like a savings account at a bank — you deposit money, earn interest, and can withdraw it — but the name reflects the member-ownership structure. If you need an account for regular bill payments and debit card use, you want a share draft account instead, which is the credit union version of a checking account.

The confusion happens because credit unions use different terminology than banks. A bank has checking and savings. A credit union has share draft accounts (checking) and share accounts (savings). The function is the same; the name is different.

Key Takeaways

  • A share account is a savings account at a credit union where your money earns interest and you own a fractional share of the institution.
  • A share draft account is the credit union equivalent of a checking account and is designed for frequent transactions and bill payments.
  • Share accounts typically have limits on how many withdrawals you can make per month, while share draft accounts do not.
  • You can hold both a share account and a share draft account at the same credit union, just as you would at a bank.

How share accounts differ from share draft accounts

A share draft account functions exactly like a checking account. You get a debit card, write checks, set up automatic bill payments, and make unlimited transactions. The credit union charges a monthly fee (or waives it if you meet certain conditions like maintaining a minimum balance). Interest rates on share draft accounts are typically very low or zero.

A share account is built for holding money rather than spending it. You earn interest on the balance, but federal law limits you to six withdrawals per month (this rule has been relaxed at times, so check with your specific credit union). You may not get a debit card for a share account, and you cannot write checks against it. Withdrawals usually happen through transfers to another account, ATM withdrawals, or in-person at a branch.

The trade-off is straightforward: share draft accounts offer convenience and unlimited access; share accounts offer interest earnings and are meant to stay relatively untouched.

Interest rates and how they compare to banks

Share accounts at credit unions often pay higher interest rates than savings accounts at banks, especially on smaller balances. Credit unions are nonprofit cooperatives, so they return earnings to members rather than shareholders. This structure sometimes allows them to offer better rates on savings products.

However, rates vary widely by credit union and change frequently. A share account at one credit union might pay 0.50% annual percentage yield (APY) while another pays 4.50% APY on the same balance. The only way to know what your credit union offers is to ask directly or check their website. Do not assume all credit unions pay better rates — some pay less than banks.

Share draft accounts at credit unions rarely pay interest, similar to most checking accounts at banks. If earning interest on your checking balance matters to you, ask whether your credit union offers a money market share account, which is a hybrid product that may pay higher rates but with some withdrawal limits.

Withdrawal limits and how they affect your use

Federal Regulation D historically capped withdrawals from share accounts at six per month. This rule was suspended during the pandemic and has remained flexible, but many credit unions still enforce it or have their own limits. Before opening a share account, ask your credit union what their current withdrawal policy is.

The limit applies to certain types of withdrawals — typically transfers to another account, checks written against the account, and debit card transactions. ATM withdrawals and in-person withdrawals at the branch may or may not count, depending on the credit union's policy. If you exceed the limit in a month, the credit union may charge a fee, close the account, or convert it to a checking account.

This is why share accounts work best for money you do not plan to touch often. If you need to move money in and out frequently, a share draft account is the better choice.

Opening both account types at the same credit union

Most credit unions let you open both a share account and a share draft account at the same time. Many members do this: they use the share draft account for daily spending and bill payments, and the share account as an emergency fund or savings goal. Money moves easily between them through transfers.

Some credit unions require a minimum opening deposit in a share account (often $5 to $25) to become a member. Once you are a member, you can open additional accounts. Check your credit union's membership requirements and account minimums before you visit or call.

If you are comparing credit unions, ask whether they charge monthly maintenance fees on share accounts, what the interest rate is, and whether there are any perks for holding multiple accounts (some credit unions waive fees if you maintain a combined balance across all your accounts).

When to use a share account versus a share draft account

Use a share account if you want to earn interest on savings and do not need frequent access. This works well for an emergency fund, a down payment fund, or money set aside for a specific goal. The interest rate is usually better than a checking account, and the withdrawal limits actually help you avoid dipping into the money impulsively.

Use a share draft account if you need a place to receive paychecks, pay bills, and make everyday purchases. You will not earn meaningful interest, but you get the convenience of a debit card, check-writing, and unlimited transactions. Many people keep a small balance in a share draft account (just enough to cover monthly expenses) and keep the rest in a share account.

Some credit unions offer money market share accounts, which sit between the two. These accounts pay higher interest than regular share accounts but may have higher minimum balances or slightly fewer withdrawal options. Ask whether your credit union has this product if you want more flexibility than a regular share account but better rates than a share draft account.

How to find out what your credit union calls their accounts

Not all credit unions use the exact terms "share account" and "share draft account." Some call them by other names — for example, a savings share, regular share, or transaction account. The best way to know what you are getting is to ask directly or read the account disclosure documents on the credit union's website.

When you call or visit, ask: "What is the difference between your savings and checking accounts?" and "How many withdrawals can I make per month from savings?" The answers will tell you whether the savings product has withdrawal limits and whether it earns interest. Do not rely on the name alone — the function is what matters.

Frequently Asked Questions

Can I use a share account like a checking account?

Not really. Most share accounts do not come with a debit card or checkbook, and they have monthly withdrawal limits. If you need to pay bills and make frequent transactions, you need a share draft account instead. A share account is designed for holding money, not spending it.

Do I earn interest on a share draft account?

Almost never. Share draft accounts work like checking accounts and typically pay zero or near-zero interest. If you want to earn interest, you need a share account or a money market share account. Some credit unions offer interest-bearing checking, but it is rare and usually requires a very high minimum balance.

What happens if I withdraw more than the limit from my share account?

Your credit union may charge a fee for each excess withdrawal, or they may convert your account to a checking account. Some credit unions simply decline the transaction. Check your account agreement or call your credit union to find out their specific policy before you open the account.

Is a share account safer than a bank savings account?

Share accounts at federally insured credit unions are protected the same way bank savings accounts are — up to $250,000 per account owner through the National Credit Union Administration (NCUA). The insurance coverage is identical; the name and structure are different.

Can I transfer money between my share account and share draft account?

Yes. Transfers between your own accounts at the same credit union are usually free and instant or next-business-day. This is one reason many members keep both types of accounts — they can move money from savings to checking as needed without going to the branch.