A share draft is a checking account offered by credit unions, not a savings account
A share draft account is a credit union's version of a checking account. You deposit money (called a "share" because you own part of the credit union), and you can write checks or use a debit card to withdraw funds. The word "draft" comes from the older practice of withdrawing money by written order—essentially what a check is.
The key difference from a savings account: a share draft is designed for frequent transactions. You can write as many checks as you want, make unlimited debit card purchases, and access your money on demand without penalty. A savings account, by contrast, is meant to hold money you're not spending regularly, and many come with limits on how often you can withdraw.
Credit unions use different terminology than banks. Where a bank calls it a "checking account," a credit union calls it a "share draft account." The function is identical—it's the institution type that changes the name.
Key Takeaways
- A share draft account is a credit union checking account that lets you write checks and use a debit card for everyday spending.
- Share drafts are meant for frequent transactions, while savings accounts are meant for money you're holding rather than spending.
- Credit unions and banks use different names for the same product: share draft versus checking account.
- Share draft accounts typically earn little to no interest, just like most checking accounts at banks.
- You need to be a credit union member to open a share draft account, which usually requires living or working in a specific area or joining a may have access to group.
How a share draft account works in practice
When you open a share draft account at a credit union, you deposit an initial amount of money. That money becomes your "share" in the credit union—you're technically a part-owner of the institution. The credit union then issues you checks and a debit card so you can access that money.
You can write checks to pay bills, use your debit card at stores or online, set up automatic payments, and withdraw cash at ATMs. There are no limits on how many transactions you can make per month, unlike some savings accounts that cap withdrawals. Most share draft accounts charge a monthly fee (typically $5 to $15), though some credit unions waive the fee if you maintain a minimum balance or set up direct deposit.
Interest rates on share draft accounts are usually very low or zero. Some credit unions offer a small rate—often less than 0.01 percent annually—but most don't. If earning interest is your goal, you'd move money into a credit union savings account or money market account instead.
Share draft versus savings account: the practical differences
The main difference is purpose. A share draft is your spending account; a savings account is your holding account. Here's what that means in real terms:
| Feature | Share Draft Account | Savings Account |
|---|---|---|
| Check writing | Yes, unlimited | No |
| Debit card | Yes | Usually no |
| Transaction limits | None | Often 6 per month (varies by institution) |
| Interest earned | Usually 0% or very low | Higher rates possible, but still modest |
| Monthly fee | $5–$15 typical | $0–$10 typical |
| Best for | Daily spending and bill pay | Building emergency funds or short-term goals |
If you need to pay bills regularly, buy groceries, and access your money frequently, a share draft account is the right tool. If you're trying to set aside money and earn a small return while keeping it separate from your spending, a savings account makes more sense.
Who can open a share draft account
You must be a member of a credit union to open a share draft account. Credit union membership isn't automatic—you have to meet the union's field of membership requirements. These vary widely. Some credit unions serve everyone in a geographic area (a city or county). Others serve people who work for a specific employer, belong to a particular organization, or have a family member who's already a member.
To find a credit union you can join, search the CO-OP Network or Shared Branch locator on the Credit Union National Association website, or ask your employer if they sponsor a credit union. Once you confirm you're may be able to access, you'll need to provide a government ID, proof of address, and your Social Security number to open an account.
Share draft accounts and NCUA insurance
Money in a share draft account is protected by the National Credit Union Administration (NCUA), which is the federal insurer for credit unions. The NCUA insures up to $250,000 per account holder per credit union. This is the same coverage level as FDIC insurance at banks, so your money is equally safe whether you use a credit union or a bank.
If your credit union fails, the NCUA steps in and makes sure you get your money back up to the $250,000 limit. This protection applies to share draft accounts, savings accounts, and other account types at the credit union.
When a share draft account makes sense
Choose a share draft account if you want a low-cost way to handle everyday banking at a credit union. Credit unions often charge lower fees than banks and offer better customer service because they're member-owned. If you're already a credit union member or can become one, a share draft account is a straightforward checking option.
However, if you're comparing a credit union share draft to a bank checking account, the choice depends on fees, interest rates, and which institution has branches or ATMs near you. Some banks offer free checking with no minimum balance; some credit unions do too. Shop around based on your actual needs—how many checks you write, whether you want interest, and what fees matter to you.
Frequently Asked Questions
Can I earn interest on a share draft account?
Most share draft accounts earn zero or near-zero interest. Some credit unions offer a small rate (under 0.01 percent), but it's rare. If you want to earn interest, ask your credit union about a savings account or money market account instead, which typically offer higher rates.
What happens if I write a check and don't have enough money?
The check will bounce, and you'll likely face an overdraft fee from your credit union (typically $25–$35). Some credit unions offer overdraft protection, which links your share draft to a savings account and automatically transfers money if you go negative. Ask your credit union whether this option is available.
Is a share draft account the same as a checking account?
Yes, functionally they are identical. A share draft is what credit unions call a checking account. Banks use the term "checking account," but the product works the same way: you deposit money, write checks, use a debit card, and pay bills.
Do I need a minimum balance to keep a share draft account open?
It depends on the credit union. Some require a minimum balance (often $25–$100) to avoid a monthly fee. Others waive fees if you set up direct deposit or maintain a certain balance. Check with your specific credit union about their requirements.
Can I have both a share draft and a savings account at the same credit union?
Yes. Many people keep a share draft for spending and a savings account for emergency funds or goals. Both accounts are insured separately up to $250,000 by the NCUA, so you can safely hold money in both.