A checking account at a credit union is called a share draft account

Credit unions use the term share draft account instead of "checking account" because of how they are legally structured. When you open an account at a credit union, you are buying shares in the credit union itself — you become a partial owner. A share draft account is the credit union's way of saying you own shares and can write drafts (checks) against the money in that account.

Some credit unions use the terms interchangeably on their websites and marketing materials, so you may see both "checking account" and "share draft account" used to describe the same product. The function is identical to a checking account at a bank: you deposit money, write checks, use a debit card, set up automatic bill payments, and access your funds through online banking or an ATM.

The name difference matters mainly when you are reading credit union documents, contracts, or fee schedules. If you see "share draft account" listed, that is the checking account product. Understanding this terminology helps you find the right account type when comparing options or reading about credit union services.

Key Takeaways

  • Credit unions call checking accounts "share draft accounts" because depositing money means you own shares in the credit union.
  • A share draft account works exactly like a bank checking account — you can write checks, use a debit card, and pay bills electronically.
  • Many credit unions now use "checking account" and "share draft account" as synonyms in their marketing, though the legal name remains share draft.
  • The term appears in official documents, fee schedules, and account agreements, so recognizing it helps you understand credit union paperwork.

Why credit unions use different terminology

The distinction comes from the credit union's legal structure as a cooperative. Banks are for-profit institutions owned by shareholders who buy stock. Credit unions are member-owned cooperatives, and when you open an account, you purchase a share of the organization. That share is what gives you voting rights and a claim on the credit union's assets.

A "draft" is a legal term for a written order to pay money — essentially what a check is. So a share draft account is an account where you hold shares and can issue drafts against your balance. This naming convention has been standard in the credit union industry for decades, though it has become less prominent as credit unions have modernized their language to match what consumers expect from banks.

How a share draft account differs from a savings account at a credit union

Credit unions typically offer both share draft accounts and share savings accounts. A share draft account is designed for frequent transactions: writing checks, using your debit card multiple times per week, and setting up automatic payments. A share savings account is meant for money you are not spending regularly and often earns a small amount of interest.

The minimum balance requirements, monthly fees, and interest rates differ between the two. Share draft accounts usually have no interest but may charge a monthly maintenance fee (though many credit unions waive this fee). Share savings accounts typically earn interest but may limit how many withdrawals you can make per month or charge a fee if your balance drops below a certain level.

What you can do with a share draft account

A share draft account gives you the same payment tools as a bank checking account. You receive a debit card for everyday purchases and ATM withdrawals. You can write physical checks if the credit union provides them. Most credit unions offer online banking where you can transfer money between your own accounts, set up automatic bill payments, and deposit checks by phone or mobile app.

You can also arrange direct deposit of your paycheck into a share draft account. Some credit unions allow you to link your share draft account to a savings account for overdraft protection, meaning if you overdraw your checking balance, money automatically transfers from savings to cover it. The specific features depend on your credit union's policies.

Opening a share draft account at a credit union

To open a share draft account, you must first become a member of the credit union. Membership requirements vary — some credit unions are open to anyone in a geographic area, while others require you to work for a specific employer, belong to a certain organization, or live in a particular community. Once you meet the membership requirement, you can open a share draft account.

You will need to bring a government-issued ID and proof of address (a recent utility bill or lease agreement works). The credit union will ask you to make an initial deposit, usually between $25 and $100, which becomes your first share purchase. You can complete the process in person at a branch, or many credit unions now allow you to start online and finish by visiting a branch or mailing in documents.

Fees and features to compare

Share draft accounts vary by credit union. Some charge a monthly maintenance fee ($5 to $15 is common), while others waive the fee if you maintain a minimum balance or set up direct deposit. Overdraft fees typically range from $25 to $35 per transaction. Many credit unions offer free online bill pay, free debit cards, and free ATM access through shared branching networks or ATM alliances.

Interest rates on share draft accounts are rare — most credit unions pay no interest on checking balances. However, some credit unions offer a small rate (0.01% to 0.05% annually) if you meet certain conditions like maintaining a high balance or setting up direct deposit. Compare the fee structure and features across credit unions in your area to find the account that matches your spending habits.

Frequently Asked Questions

Is a share draft account the same as a checking account?

Yes, functionally they are identical. A share draft account is simply the credit union's legal term for a checking account. You can write checks, use a debit card, pay bills online, and access your money the same way you would at a bank checking account.

Do I have to buy shares to open a share draft account?

Yes, but the initial share purchase is small — usually $25 to $100. This purchase makes you a member-owner of the credit union. The money stays in your account and is not a separate fee; it is part of your account balance.

Can I write checks from a share draft account?

Most credit unions offer check-writing on share draft accounts, though some newer or online-focused credit unions may not provide physical checks. Ask your credit union whether checks are included or if you need to request them separately.

What happens to my shares if I close my share draft account?

When you close your account, the credit union returns your share purchase to you as part of your final withdrawal. If you had $500 in the account and your initial share was $50, you would receive $500 when you close.

Can I have both a share draft account and a share savings account?

Yes, most credit unions allow you to hold multiple accounts. Many members keep a share draft account for daily spending and a share savings account for emergency funds or goals. The accounts are separate, and you can transfer money between them.