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A share-draft account is what credit unions call a checking account. The terminology reflects the ownership structure of credit unions: when you deposit money, you are buying shares in the credit union, and "draft" is a traditional banking term for a check. So a share-draft account is an account you own a stake in and can draw checks against. The Consumer Financial Protection Bureau confirms this directly: credit unions call checking accounts share-draft accounts precisely because account holders are members and partial owners, not merely customers.
Think of it like owning a co-op apartment instead of renting: you live there the same way, but you hold equity in the building.
Functionally, share-draft accounts operate identically to bank checking accounts. You deposit money, access it through a debit card, write checks, use an ATM, and pay bills. Most credit unions also offer online and mobile banking with the same features you would find at a traditional bank.
The difference shows up in a few specific areas. Earnings on the balance are called dividends rather than interest, because you are a member-owner receiving a share of the credit union's profits rather than a bank customer receiving a contractual interest payment. The National Credit Union Administration insures share-draft account balances up to $250,000 per member per account category, which is the credit union equivalent of FDIC insurance at banks.
The share-draft label is not just branding. Credit unions are not-for-profit cooperatives owned by their members. Any profits the institution generates are returned to members in the form of lower loan rates, higher dividend rates on deposits, and reduced fees. Banks are for-profit businesses with shareholders separate from their customers.
This structural difference is why share-draft accounts often have lower fees and minimum balance requirements than comparable bank checking accounts. The credit union's incentive is to serve members, not maximize revenue from fees.
The "share" naming convention extends to other credit union accounts. A share account is the credit union equivalent of a savings account. A share certificate is the credit union version of a certificate of deposit. In all cases, the naming reflects the member's ownership stake rather than a purely transactional relationship.
To open a share-draft account, you must first qualify for credit union membership. Each credit union defines its membership criteria, which might be based on geography, employer, professional association, military service, or family relationship to an existing member. Some large credit unions have broad membership eligibility and are effectively open to anyone. Once you qualify, the initial deposit to open a share account, which establishes your membership stake, is usually very small, often $5 to $25.
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