A share account and a checking account are not the same thing
A share account is a savings account at a credit union. A checking account is a transaction account at a bank or credit union designed for frequent deposits and withdrawals. The key difference: share accounts are meant to hold money; checking accounts are meant to move money. You can write checks from a checking account. You cannot write checks from a share account, though some credit unions let you transfer money from a share account to a checking account to pay bills.
The confusion happens because credit unions use different names for the same products that banks use. At a bank, you have a savings account and a checking account. At a credit union, you have a share account (savings) and a share draft account (checking). Both do the same jobs, but the terminology is different because credit unions are member-owned cooperatives, not corporations.
If you are opening an account at a credit union and the person asks whether you want a share account or a share draft account, you are really being asked whether you want savings or checking. The choice depends on how you plan to use the money.
Key Takeaways
- A share account is a credit union savings account; a checking account (or share draft account at a credit union) is for frequent transactions and bill payments.
- Share accounts typically earn interest but have limits on how many times per month you can withdraw money without penalty.
- Checking accounts allow unlimited deposits and withdrawals but usually earn little or no interest.
- You can have both at the same credit union or bank, using the share account to save and the checking account to pay bills.
- Credit unions call checking accounts "share draft accounts" because members own shares in the institution rather than holding deposits.
How a share account works differently from checking
A share account holds your money and may pay you interest on the balance. The interest rate varies by credit union and changes over time. In exchange, the credit union limits how many times you can withdraw money each month—typically six withdrawals or transfers without a fee. This limit exists because the credit union invests your money and needs it to stay relatively stable.
A checking account has no withdrawal limit. You can deposit money, write checks, use a debit card, set up automatic bill payments, and transfer funds as many times as you want in a month. Most checking accounts pay no interest, or interest so small it rounds to zero. The credit union or bank makes money by lending out the money you deposit, not by paying you to hold it.
If you exceed the withdrawal limit on a share account, you typically pay a fee per extra withdrawal—often $5 to $10. Some credit unions waive the limit if your balance stays above a certain amount, or if you are a member in good standing. Read the account agreement to know the exact rules for the account you are considering.
When to use a share account instead of checking
Use a share account if you have money you do not need to touch often. This might be an emergency fund, money set aside for a specific goal, or a buffer you keep separate from your spending money. Because the account earns interest and has withdrawal limits, it discourages you from dipping into it on impulse. The interest is usually small—often less than 1 percent per year—but it is more than a checking account will pay.
A share account also makes sense if you want to keep your savings separate from the money you use for bills and everyday spending. Many people open both: a checking account for paychecks and bill payments, and a share account for savings. This separation makes it harder to accidentally spend money you meant to save.
Some credit unions offer high-yield share accounts with better interest rates if you maintain a higher balance or meet other conditions. These are worth comparing if you have a larger amount to save, because the extra interest can add up over time.
When you need a checking account instead
Use a checking account if you receive regular paychecks, pay bills, or make frequent purchases. A checking account gives you a debit card, the ability to write checks, and online bill pay—all the tools you need to manage money flowing in and out. There is no limit on how many times you can use these features.
If you are paid by direct deposit, your employer will ask for a checking account number, not a share account number. Direct deposit goes to checking accounts. You can then transfer money from checking to a share account if you want to save part of your paycheck, but the initial deposit lands in checking.
A checking account is also the right choice if you need to pay bills online or by automatic payment. While some credit unions let you set up bill pay from a share account, it is less common and more cumbersome. Checking accounts are built for this purpose.
Share accounts at banks versus credit unions
Banks do not use the term "share account." At a bank, you open a savings account, which works the same way as a credit union share account—it earns interest, has withdrawal limits, and is meant for money you do not spend often. The terminology is different, but the function is identical.
Credit unions use "share" language because members own the credit union collectively. When you open an account, you buy a share of the credit union. This is a legal distinction, not a practical one for how you use the account. Your money is still insured by the National Credit Union Administration (NCUA) up to $250,000, just as bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC).
Some credit unions also offer money market share accounts, which are a hybrid between a share account and a checking account. These accounts pay higher interest than regular share accounts but allow a limited number of checks or transfers per month. They are worth considering if you want better interest rates but still need occasional access to your money.
How to decide which account to open
Start by thinking about how you will use the money. If it is your paycheck and bill-paying money, open a checking account (or share draft account at a credit union). If it is money you want to save and keep separate, open a share account. Many people open both at the same institution.
Compare the interest rates on share accounts at different credit unions. Rates vary, and a higher rate can make a real difference if you have a large balance. Also check the monthly withdrawal limit and any fees for exceeding it. Some credit unions waive fees for members who maintain a minimum balance or have direct deposit set up.
Ask whether the credit union offers online transfers between your share account and checking account. This makes it easy to move money when you need it without visiting a branch. Also confirm that both accounts are insured by the NCUA—they should be, but it is worth verifying.
Frequently Asked Questions
Can I write checks from a share account?
No, not from a regular share account. You need a checking account or share draft account to write checks. Some credit unions let you transfer money from a share account to a checking account online or by phone, then write a check from the checking account, but you cannot write checks directly against the share account.
Do I have to choose between a share account and checking, or can I have both?
You can have both. Most people who use credit unions have a checking account (share draft account) for regular spending and a share account for savings. You can transfer money between them as needed, and both are insured separately up to $250,000 by the NCUA.
What happens if I withdraw more than six times from my share account in a month?
You typically pay a fee for each withdrawal over the limit—often $5 to $10 per extra withdrawal. Some credit unions waive the limit if your balance stays above a certain amount. Check your account agreement or call the credit union to know the exact penalty and whether any waivers apply to you.
Does a share account earn enough interest to be worth it?
Interest rates on share accounts are usually less than 1 percent per year, so the money earned is small. However, it is more than a checking account pays, and the withdrawal limit helps you avoid spending the money. If you have a larger balance or find a credit union with a higher rate, the interest adds up over time.
If I move to a different credit union, what happens to my share account?
You will need to open a new account at the new credit union. You can transfer your balance from the old share account to the new one by asking the new credit union to initiate an ACH transfer, or by withdrawing the money and depositing it yourself. Close the old account once the transfer is complete to avoid fees.