A share account is not the same as a savings account, though the names are sometimes used interchangeably

A share account is a membership account at a credit union. When you open one, you are buying a share of ownership in that credit union — you become a partial owner, not just a customer. A savings account at a bank, by contrast, is a deposit account where the bank holds your money and pays you interest. The key difference: with a share account, your money represents ownership; with a savings account, it represents a loan you have made to the bank.

This distinction matters because it affects how your money is protected, what you pay in fees, and what interest you earn. Share accounts are offered only by credit unions. Savings accounts are offered by banks and some credit unions. If you are banking at a credit union, you may have both — a share account (required for membership) and a savings account (optional, for additional funds).

The confusion happens because credit unions often call their basic membership account a "share savings account" or "share draft account," which blends both terms. When you see those names, you are looking at a share account — the word "savings" is just part of the product name.

Key Takeaways

  • A share account makes you a part-owner of the credit union; a savings account at a bank makes you a creditor who has loaned money to the bank.
  • Share accounts exist only at credit unions; savings accounts exist at banks and some credit unions.
  • Both are insured up to $250,000 by their respective insurance bodies — the National Credit Union Administration (NCUA) for share accounts, the Federal Deposit Insurance Corporation (FDIC) for bank savings accounts.
  • Share accounts typically have lower fees and higher interest rates than bank savings accounts, though rates and fees vary by institution.
  • If you bank at a credit union, you must open a share account to become a member, but you can also open a separate savings account if you want.

How a share account works at a credit union

When you open a share account at a credit union, you deposit money and that money becomes your share of the credit union's assets. The credit union uses the pooled money from all members to make loans to other members — car loans, mortgages, personal loans. The interest paid on those loans is returned to members partly as interest on their share accounts and partly as dividends.

You can withdraw money from a share account the same way you would from a bank savings account: through an ATM, at a teller window, or online. Many credit unions issue debit cards tied to share accounts. Some share accounts allow you to write checks, which makes them function more like checking accounts than savings accounts.

The minimum deposit to open a share account varies by credit union. Some require as little as $5 or $25; others require $100 or more. Once you are a member, you typically must maintain a minimum balance — often $25 to $100 — to keep the account open.

How a savings account works at a bank

When you open a savings account at a bank, you are depositing money that the bank will lend out to other customers and businesses. The bank pays you interest on your deposit as compensation for letting them use your money. The interest rate is set by the bank and can change at any time.

You can withdraw money from a bank savings account, but banks are allowed to limit how many withdrawals you make per month — though this rule is less strictly enforced than it once was. You cannot write checks on a savings account or use a debit card tied to it. If you need to move money out frequently, a checking account is a better fit.

Bank savings accounts also have minimum deposits and minimum balances, which vary widely. Some banks have no minimum; others require $500 or more. If your balance falls below the minimum, the bank may charge a monthly fee or close the account.

Insurance protection: NCUA vs. FDIC

Both share accounts and bank savings accounts are insured against loss if the institution fails. The difference is which agency provides the insurance. Share accounts are insured by the National Credit Union Administration (NCUA), a federal agency that insures credit unions. Bank savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC), a federal agency that insures banks.

Both the NCUA and FDIC cover up to $250,000 per account holder per institution. This means if your credit union or bank fails, you will not lose money up to that limit. The coverage applies to the account balance plus any accrued interest. If you have more than $250,000 at one institution, the amount above that is not protected.

You can have multiple accounts at the same institution and still be covered up to $250,000 per account type. For example, at a credit union you might have a $250,000 share account and a $250,000 savings account, and both would be fully insured.

Fees and interest rates: what to expect

Credit unions typically charge lower fees than banks and pay higher interest rates on share accounts than banks pay on savings accounts. This is because credit unions are member-owned nonprofits, so they return profits to members rather than to shareholders. However, this is a general pattern, not a rule — some banks offer competitive rates and low fees, and some credit unions charge more.

Common fees on share accounts include monthly maintenance fees (usually $0 to $5), overdraft fees if you overdraw a share draft account, and ATM fees if you use an out-of-network ATM. Many credit unions waive monthly fees if you maintain a minimum balance or set up direct deposit.

Interest rates on share accounts vary by credit union and by how much money you have in the account. Some credit unions offer tiered rates — higher interest on larger balances. Rates also change based on what the Federal Reserve does with interest rates. Currently, share account rates range widely, but you can find current rates by contacting credit unions in your area or checking their websites.

When to choose a share account vs. a savings account

Choose a share account if you want to bank at a credit union and benefit from lower fees and potentially higher interest rates. You must open a share account to become a credit union member, so if you are joining a credit union, this choice is made for you. A share account works well as your primary account for everyday banking and saving.

Choose a bank savings account if you want to keep money separate from your checking account and do not need frequent access to it. A savings account at a bank is useful if you are not a credit union member or if you want to use a specific bank for other reasons. A savings account is also a good choice if you want to avoid the membership requirement that comes with a credit union share account.

You do not have to choose one or the other. Many people have both — a share account at a credit union for everyday banking and a savings account at a bank or another credit union for longer-term savings. Having accounts at multiple institutions can also provide extra insurance protection, since each institution's coverage is separate.

What happens to your share account if you leave the credit union

If you close your share account or leave the credit union, you can withdraw your money. The credit union will send you a check or transfer the funds to another account. You will not lose your money, and you will not be charged a penalty for leaving, though some credit unions may charge a small account closure fee.

Your membership in the credit union ends when you close your share account. If you want to rejoin later, you can open a new share account, though you may need to meet membership requirements again (such as living in a certain area or working for a certain employer, depending on the credit union).

Frequently Asked Questions

Can I have a share account and a savings account at the same credit union?

Yes. The share account is required for membership, but you can open additional savings accounts if you want to keep money separate or earn different interest rates. Both accounts are insured separately up to $250,000 each by the NCUA.

Do I earn interest on a share account?

Yes, though the rate varies by credit union and may be very low. Some credit unions pay dividends on share accounts instead of interest; the effect is the same — your money grows over time. Rates change based on what the Federal Reserve does and what the credit union decides.

Can I write checks on a share account?

It depends on the credit union. Some share accounts allow check writing (these are called share draft accounts), and some do not. Ask your credit union what your share account allows. If you need check-writing ability, you may need to open a separate share draft account.

What is the minimum balance for a share account?

Minimums vary by credit union. Some require as little as $5 to open and $25 to maintain; others require $100 or more. Check with the specific credit union you are interested in to find out their requirements.

Is my money safer in a share account or a savings account?

Both are equally safe up to $250,000 because both are federally insured. A share account is insured by the NCUA; a bank savings account is insured by the FDIC. As long as your balance is under $250,000 at each institution, your money is protected if the institution fails.