A share draft is a checking account offered by credit unions, not a savings account

A share draft is a checking account at a credit union. It works almost identically to a checking account at a bank — you deposit money, write checks against it, use a debit card, and set up automatic payments. The main difference is the name and the institution: credit unions call their checking accounts "share drafts" because members technically own a share of the credit union itself, and the account lets you "draft" against that share.

If you are comparing it to a savings account, the key distinction is purpose and access. A share draft is designed for frequent transactions — paying bills, making purchases, withdrawing cash. A savings account is designed to hold money longer and typically earns interest. Most credit unions offer both: a share draft for spending and a savings account (sometimes called a "share savings account") for storing money.

The confusion arises because credit unions use different terminology than banks. What a bank calls a "checking account," a credit union calls a "share draft." What a bank calls a "savings account," a credit union might call a "share savings account." The function is the same; only the language differs.

Key Takeaways

  • A share draft is a credit union's version of a checking account, designed for regular spending and bill payments.
  • Share drafts and savings accounts serve different purposes — one is for frequent access, the other for holding money and earning interest.
  • Credit unions use "share" terminology because members own a piece of the institution, but the accounts work like bank accounts in practice.
  • Most credit unions offer both share drafts and share savings accounts, just as banks offer both checking and savings.

How a share draft works in daily use

When you open a share draft at a credit union, you receive a debit card and checks. You can deposit paychecks, transfer money in from other accounts, and make withdrawals at ATMs or the teller window. You can set up automatic bill payments, schedule transfers to other accounts, and use the debit card for purchases online and in stores — exactly as you would with a bank checking account.

The account typically comes with no monthly fee or a low monthly fee, depending on the credit union's policies. Some credit unions waive fees if you maintain a minimum balance or set up direct deposit. Interest rates on share drafts are usually very low or zero, which is standard for checking accounts across both banks and credit unions.

One practical difference: credit unions are smaller networks than major banks, so ATM access may be more limited unless your credit union belongs to a shared branching network or ATM alliance. Before opening an account, check whether the credit union's ATM network covers the places where you withdraw cash most often.

Share draft vs. savings account: what each one is for

A share draft is built for money you spend regularly. You might keep your paycheck there, pay your rent or mortgage from it, buy groceries, and cover utilities. The account is designed to handle dozens of transactions per month without penalty.

A savings account — whether at a bank or credit union — is built to hold money you are not spending right now. It earns interest, which means the credit union or bank pays you a small percentage of your balance each month or quarter. The tradeoff is that most savings accounts limit the number of withdrawals you can make per month (though this rule is less strictly enforced than it once was). Savings accounts are where you keep an emergency fund, money for a future goal, or funds you want to grow over time.

Many people use both: a share draft for the money they need this month, and a share savings account for the money they are building up. The share draft stays active with regular deposits and withdrawals; the share savings account sits quieter and accumulates interest.

Why credit unions use the term "share draft"

Credit unions are member-owned cooperatives, not corporations owned by shareholders. When you open an account at a credit union, you buy a share of the credit union itself — usually a small amount, often $25 or less. That share makes you a member and part-owner. A "share draft" is literally a draft (a check or withdrawal) against your share in the credit union.

This ownership structure is why credit unions often offer better interest rates on savings and lower fees than banks — the profits are returned to members rather than paid to outside investors. But from a practical standpoint, the account works the same way a bank checking account does. The terminology is different; the function is not.

Switching between a share draft and a savings account

If you have a share draft and want to move money into a savings account at the same credit union, you can usually do it online, by phone, or in person at a branch. The transfer is typically instant or takes one business day. Many people set up automatic transfers — for example, moving $50 from their share draft to their share savings account every payday — to build savings without thinking about it.

If you want to move money out of a share draft to pay a bill or make a purchase, you can write a check, use your debit card, set up an automatic payment, or withdraw cash. Share drafts have no withdrawal limits, unlike savings accounts, which historically had a six-withdrawal-per-month cap (though that rule has been relaxed in recent years).

Some credit unions offer a linked share draft and share savings account, where you can easily move money between them or set one up as an overdraft protection for the other. Ask your credit union whether this option is available.

Interest rates and fees on share drafts

Most share drafts earn little to no interest. Some credit unions offer a small rate — often less than 0.01% annually — but many offer zero. The focus of a checking account is liquidity and access, not growth, so low or no interest is standard across both banks and credit unions.

Fees vary by credit union. Some charge no monthly maintenance fee. Others charge $5 to $15 per month but waive the fee if you maintain a minimum balance (often $500 to $1,000), set up direct deposit, or meet other conditions. Overdraft fees, if you go negative, typically range from $25 to $35 per occurrence. Ask your credit union for a fee schedule before opening an account so you know what to expect.

Share savings accounts, by contrast, usually earn a higher interest rate than share drafts — sometimes 0.05% to 0.50% or more, depending on the credit union and current market rates. The tradeoff is that you are not meant to access the money as frequently.

How to decide whether you need a share draft or a savings account

Open a share draft if you need an account for regular spending: paying bills, making purchases, receiving your paycheck, and withdrawing cash. It is your working account, the one you touch multiple times per week.

Open a share savings account if you want to set money aside and let it grow, even if the growth is small. Use it for an emergency fund (money you keep for unexpected costs), a goal fund (money for a vacation or large purchase), or simply to separate spending money from savings money so you do not accidentally spend what you are trying to save.

Most people benefit from having both. The share draft handles the flow of money in and out; the share savings account holds the buffer. If your credit union requires a minimum deposit to open either account, ask whether you can open both at the same time and whether the minimum can be split between them.

Frequently Asked Questions

Can I write checks from a share savings account?

Most credit unions do not issue checks for share savings accounts. Some offer a limited number of checks or transfers per month, but the account is not designed for frequent check writing. If you need to write checks regularly, use a share draft instead.

Do I need a share draft if I only use online banking and a debit card?

No. Many people never write checks and manage everything through their debit card and online transfers. A share draft still works for you — you just will not use the checks. The account gives you the same debit card and online access as a savings account would, plus the option to write checks if you ever need to.

Can I have multiple share drafts at the same credit union?

Most credit unions allow it, though some limit you to one. Ask your credit union. Some people open a second share draft for a specific purpose — for example, one for household expenses and one for a side business — to keep money organized.

What happens to my share draft if I close my credit union membership?

Your account will be closed and any remaining balance returned to you. Credit unions typically require you to maintain membership to keep an account open. If you move away or no longer meet the membership criteria, you will need to close the account or transfer the money elsewhere.

Is a share draft FDIC insured?

No. Credit unions are insured by the NCUA (National Credit Union Administration), not the FDIC. NCUA insurance covers up to $250,000 per account type per member, which is the same protection level as FDIC insurance. Your share draft and share savings account are insured separately, so you can have up to $250,000 in each.