A share account is a savings account offered by credit unions instead of banks

When you open a savings account at a credit union, it is called a share account instead of a savings account. The name comes from the fact that you own a small share of the credit union itself — you are not just a customer, you are a partial owner. The account works the same way a savings account does: you deposit money, it earns interest, and you can withdraw it when you need it. The main difference is who runs the institution and how profits are handled.

Credit unions are nonprofit organizations owned by their members. When a bank makes a profit, that money goes to shareholders and executives. When a credit union makes a profit, that money goes back to members through higher interest rates on savings, lower fees, or better loan terms. This is why share accounts often pay slightly more interest than savings accounts at traditional banks, though the difference varies by credit union and by how much money you keep in the account.

Key Takeaways

  • A share account is a savings account at a credit union, and opening one makes you a partial owner of that credit union.
  • Share accounts earn interest just like bank savings accounts, and the money is insured up to $250,000 by the National Credit Union Administration (NCUA).
  • Credit unions are nonprofit, so profits go back to members through better rates and lower fees rather than to outside shareholders.
  • You can only open a share account if you meet the credit union's membership requirements, which vary by location, employer, or family connection.

How a share account differs from a regular savings account

The practical differences between a share account and a savings account are small. Both let you deposit money, earn interest, and withdraw funds. Both are insured — a share account is insured by the NCUA up to $250,000, while a bank savings account is insured by the FDIC up to the same amount. Both have limits on how many withdrawals you can make per month, though those rules have loosened in recent years.

The real difference is ownership and profit-sharing. When you put money in a bank savings account, the bank uses your deposit to make loans and investments, keeps most of the profit, and pays you a small amount of interest. When you put money in a share account, the credit union uses your deposit the same way, but any profit beyond what it needs to operate gets returned to members. This is why share accounts sometimes offer higher interest rates, though you should compare the actual rates at your local credit union to the rates at nearby banks — the difference is not always large enough to matter.

Who can open a account and membership requirements

You cannot open a share account at just any credit union. Each credit union has a field of membership — a set of rules about who can join. Some credit unions are open to anyone who lives or works in a certain county. Others are only for employees of a specific company, members of a specific profession, or people who belong to a certain organization. Still others are open to family members of existing members.

Before you try to open a share account, you need to find out whether you meet the credit union's membership requirements. The credit union's website will list these requirements, or you can call and ask. If you do not meet the requirements, you cannot open an account there — the credit union cannot make exceptions. If you do meet them, membership is usually free, and opening a share account is the same process as opening a bank savings account: you bring identification, proof of address, and your Social Security number, and you sign paperwork.

Interest rates and how share accounts earn money

A share account earns interest, which is money the credit union pays you for letting them use your deposit. The interest rate varies by credit union and by how much money you keep in the account. Some credit unions offer higher rates if you maintain a minimum balance — for example, 0.25% interest if you keep at least $500 in the account, or 0.50% if you keep at least $5,000. Others offer the same rate no matter how much you have.

Interest rates at credit unions change over time and vary widely. You should compare the current rate at your local credit union to the rates at nearby banks and online banks before you decide where to open an account. A credit union's rate might be higher, lower, or about the same — there is no rule that says credit unions always pay more. What matters is the actual number the credit union is offering right now, not the idea that nonprofits are more generous.

Insurance and safety of your money

Money in a share account is insured by the National Credit Union Administration (NCUA), a federal agency that works the same way the FDIC does for banks. If the credit union fails, the NCUA will return your money up to $250,000. This insurance is automatic — you do not have to do anything to get it, and it does not cost you money.

The $250,000 limit applies per account holder per credit union. If you have a share account in your name and a joint share account with your spouse at the same credit union, each account is insured separately up to $250,000. If you have accounts at two different credit unions, each account is insured separately. The NCUA website has a calculator that shows you exactly how much of your money is insured if you have multiple accounts or account types.

Fees and minimum balance requirements

Share accounts usually have lower fees than bank savings accounts because credit unions are nonprofit. Many credit unions charge no monthly fee at all. Some charge a small fee if your balance drops below a minimum — for example, $5 per month if you fall below $100. Others charge a fee only if you exceed the number of withdrawals allowed per month.

Before you open a share account, ask the credit union about all fees: monthly maintenance fees, overdraft fees, fees for exceeding withdrawal limits, and fees for closing the account early. Write down the answers and compare them to fees at other credit unions and banks. A credit union with a slightly lower interest rate but much lower fees might be the better choice for your situation.

How to find a credit union you can join

The easiest way to find a credit union you are may be able to access for is to use the CO-OP Network locator or the Alliant Credit Union locator, both of which let you search by location or by employer. You can also search the NCUA's credit union finder on their website. Type in your zip code or your employer's name, and you will see a list of credit unions near you and their membership requirements.

Once you have found a credit union you can join, visit their website or call to confirm the membership requirements and ask about current interest rates and fees. Many credit unions let you open an account online, though some still require you to visit in person or mail in paperwork. Ask what documents you will need — usually an ID, proof of address, and your Social Security number — and whether you can start the process before you visit.

Frequently Asked Questions

Is my money in a share account as safe as money in a bank savings account?

Yes. Both are insured by federal agencies up to $250,000 — the NCUA insures share accounts, and the FDIC insures bank savings accounts. The insurance works the same way and protects your money equally.

Can I withdraw money from my share account whenever I want?

Yes, but there are limits on how many withdrawals you can make per month without a fee. The limit varies by credit union, but it is usually six withdrawals per month. Withdrawals at an ATM or in person at a branch typically do not count toward this limit.

What happens if the credit union I join goes out of business?

The NCUA takes over and returns your money up to $250,000. This process usually takes a few weeks. Your money is protected the same way it would be if a bank failed.

Do I have to keep a minimum balance in my share account?

It depends on the credit union. Some require a minimum balance to earn interest or to avoid a monthly fee. Others do not. Check with your credit union about their specific requirements.

Can I have a share account and a savings account at a bank at the same time?

Yes. There is no rule against having accounts at multiple institutions. Just remember that NCUA insurance covers up to $250,000 per credit union, and FDIC insurance covers up to $250,000 per bank, so if you have more than $250,000 in one place, the extra is not insured.