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

The word "share" comes from how credit unions are structured. When you open a savings account at a credit union, you are actually buying a small ownership stake in that credit union — you become a member-owner. Your savings account is called a "share" account because the money in it represents your share of the credit union's assets. In practice, it works almost exactly like a savings account at a bank: you deposit money, earn interest, and can withdraw when you need it.

The main difference is who runs the institution. Banks are for-profit companies owned by shareholders who want to make money. Credit unions are non-profit cooperatives owned by their members — the people who use them. This ownership structure affects how much interest you earn, what fees you pay, and how decisions get made about the credit union's services.

Share savings accounts are insured the same way bank savings accounts are. The National Credit Union Administration (NCUA) insures deposits up to $250,000 per account owner, per credit union. This means your money is protected even if the credit union fails.

Key Takeaways

  • A share savings account at a credit union is a savings account where your deposit represents ownership in the credit union itself.
  • Credit unions are non-profit member-owned institutions, which often means higher interest rates and lower fees than banks offer on savings accounts.
  • Your deposits are insured by the NCUA up to $250,000, the same protection that bank deposits receive.
  • You must become a member of the credit union to open a share savings account, which usually requires meeting a membership requirement like living in a certain area or working in a certain field.

How interest rates work on share savings accounts

Credit unions typically pay higher interest rates on savings accounts than banks do, though the exact rate varies by credit union and changes over time. Because credit unions are non-profit, they return earnings to members through better rates rather than paying shareholders. Some credit unions offer tiered rates, meaning you earn more interest if you keep a higher balance.

Interest is usually compounded daily or monthly, meaning you earn interest on your interest. The credit union will tell you the Annual Percentage Yield (APY) when you open the account — this is the actual amount you will earn in a year, including compounding. A higher APY means more money in your account over time, so it is worth comparing rates between credit unions before you join.

Membership requirements and how to join

You cannot open a share savings account at a credit union without becoming a member first. Membership requirements vary by credit union. Some credit unions serve people who live or work in a specific geographic area — for example, a credit union that serves a particular county or city. Others serve people who work in a specific industry or profession, or who belong to a particular organization or employer.

To find a credit union you can join, start with the CO-OP Network or Shared Branch locator on the Credit Union National Association website, or search "credit unions near me" plus your city name. When you contact a credit union, ask directly: "What are your membership requirements?" They will tell you whether you meet them. Some credit unions have relaxed their requirements in recent years and may let you join if you live in a broader region or if a family member already belongs.

Once you confirm you can join, you will need to provide identification (usually a driver's license or state ID), proof of address (a utility bill or lease), and your Social Security number. The credit union will run a background check through ChexSystems, the same system banks use. Opening the account usually takes 15 to 30 minutes in person or online.

Fees and minimum balance requirements

Many credit unions charge no monthly maintenance fee on share savings accounts, especially if you keep a small minimum balance — often $25 or less. Some credit unions waive the fee if you set up direct deposit or maintain a certain balance. Banks frequently charge $5 to $15 per month on savings accounts, so this is one area where credit unions often have an advantage.

Withdrawal limits used to be a major difference between savings and checking accounts, but federal rules changed in 2020. You can now withdraw from a savings account as many times as you want in a month without penalty, though some credit unions may still limit transfers to other accounts. Ask about this when you open your account if you plan to move money frequently.

Share savings accounts versus share draft accounts

Credit unions use different names for their accounts than banks do. A share savings account is what a bank calls a savings account — it earns interest and is meant for money you are saving. A share draft account is what a bank calls a checking account — it comes with a debit card and checks, and is meant for money you spend regularly.

Some credit unions offer a hybrid account that combines features of both, letting you earn interest while still having access to a debit card. Ask what options your credit union offers when you join. The choice depends on how you plan to use the account: if you want to save and earn interest, a share savings account is the right choice. If you need to pay bills and make everyday purchases, a share draft account makes more sense.

How to move money in and out of your account

You can deposit money into a share savings account the same ways you would at a bank: in person at a branch, through direct deposit from your employer, by mobile check deposit (taking a photo of a check), or by transfer from another account. Some credit unions also accept cash deposits at ATMs or through partner banks in the CO-OP or Shared Branch networks.

Withdrawals work the same way. You can withdraw cash at the credit union's ATMs, at any ATM in the CO-OP Network (which has over 30,000 ATMs nationwide), or at partner bank branches through the Shared Branch network. You can also transfer money to another account online or by phone. Because share savings accounts are not checking accounts, you cannot write checks against them, but you can move money to a share draft account and then spend it.

Why someone might choose a share savings account

The main reason people choose credit unions is the interest rate. If you are saving money and want it to grow, a higher APY means real money in your pocket over time. A credit union paying 4.5% APY on a $5,000 balance will give you more interest than a bank paying 0.5%, and that gap widens the longer you save.

The second reason is lower fees. Many credit unions charge no monthly fee, no overdraft fees, and no ATM fees at their network. If you have had bad experiences with bank fees, a credit union can feel like a relief. The third reason is community focus — credit unions often lend to local small businesses and support local nonprofits, so your money stays in your community rather than flowing to a distant corporate headquarters.

The main drawback is access. Credit unions have fewer branches and ATMs than large banks, though the CO-OP and Shared Branch networks help. If you travel frequently or need to deposit cash at odd hours, a bank's wider network might be more convenient. Also, not everyone can join every credit union, so you need to confirm membership first.

Frequently Asked Questions

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

Yes. Most people who use credit unions have both — a share savings account for money they are saving and a share draft account for everyday spending. You can transfer money between them online or at a branch whenever you need to. Some credit unions let you link them so money automatically moves from savings to checking if your checking balance gets low.

What happens to my share savings account if I stop being a member?

You keep your money. If you move away or change jobs and no longer meet the membership requirement, the credit union will not take your account. You can usually keep the account open and continue to earn interest, though you may not be able to open new accounts or borrow money. Ask your credit union about their specific policy when you join.

Is a share savings account safer than a bank savings account?

Both are equally safe up to $250,000 because both are insured by the federal government — banks by the FDIC and credit unions by the NCUA. The insurance covers the same risks and the same amount. The difference is not safety but interest rate and fees, which favor credit unions in most cases.

Can I open a share savings account online if I do not live near a credit union branch?

Some credit unions allow online membership and account opening, especially larger ones or those that serve a wide geographic area. Others require you to visit a branch in person or have a current member sponsor you. Contact the credit union directly to ask whether they offer online membership. If not, you may be able to join through a credit union service organization (CUSO) that handles membership for multiple credit unions.

How much interest will I earn on a share savings account?

Interest rates vary by credit union and change over time based on the broader economy. As of now, credit unions typically offer rates between 4% and 5% APY on share savings accounts, though some offer less and some offer more. Check the specific credit union's website or call them directly to see their current rate before you join.