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

When you open an account at a credit union, what a bank calls a "savings account," a credit union calls a share account. The name comes from the fact that you own a share of the credit union itself — you are a member-owner, not just a customer. The account works the same way a savings account does: you deposit money, it sits there earning interest, and you can withdraw it when you need it. The main differences are who runs it, how interest rates are set, and what protections cover your money.

Credit unions are nonprofit organizations run by their members. Because they do not have to generate profit for shareholders, they often offer higher interest rates on savings and lower fees than banks do. Your share account is insured the same way a bank savings account is — up to $250,000 per account holder per institution through the National Credit Union Administration (NCUA), which is the federal agency that oversees credit unions.

Key Takeaways

  • A share account at a credit union is functionally a savings account, but the name reflects that you own a piece of the credit union as a member.
  • Credit unions are nonprofit and member-owned, which often means higher interest rates and lower fees than traditional banks offer.
  • Share accounts are insured by the NCUA up to $250,000 per account holder, the same protection level as FDIC insurance at banks.
  • You must be a member of the credit union to open a share account, and membership requirements vary by credit union.
  • Interest rates on share accounts vary by credit union and change over time, so comparing rates across different credit unions can help you earn more on your savings.

How membership and share accounts work together

To open a share account, you first have to 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 particular organization, or have a family member who is already a member. Once you are a member, you own at least one share of the credit union, which is why the savings account is called a share account.

Your membership is permanent unless you close your account or the credit union merges with another. You do not have to buy additional shares to maintain membership, and you do not receive dividend payments the way a stock shareholder does. Instead, the credit union returns profits to members through higher interest rates on savings, lower loan rates, and reduced fees.

Interest rates and how they compare to bank savings accounts

Credit unions typically offer higher interest rates on share accounts than banks offer on savings accounts, though the difference varies depending on the credit union and the current interest rate environment. A credit union might offer 4.50% annual percentage yield (APY) on a share account while a large bank offers 0.01% on the same type of account. However, you have to shop around — not all credit unions offer competitive rates, and some online banks now match or exceed credit union rates.

Interest rates change over time as the Federal Reserve adjusts its benchmark rate. When rates rise, credit unions and banks typically raise the rates they offer on savings. When rates fall, so do the rates on share accounts. The best way to find a competitive rate is to check the current offerings from several credit unions in your area or credit unions you are may be able to access to join, then compare those rates to what online banks and traditional banks are offering.

Fees and account requirements

Many credit unions charge no monthly maintenance fee on share accounts, though some do charge a small fee if your balance falls below a minimum (often $25 to $100). Some credit unions waive the fee if you set up direct deposit or maintain a certain balance. Banks, by contrast, frequently charge monthly fees on savings accounts unless you meet balance or deposit requirements.

Credit unions also tend to charge lower fees for overdrafts, wire transfers, and other services. However, credit unions have fewer branches and ATMs than large banks, so if you need frequent in-person access or use ATMs often, you may want to check whether the credit union's network meets your needs. Many credit unions participate in shared branching networks and surcharge-free ATM networks that expand access beyond their own locations.

How to find and join a credit union

You can search for credit unions you are may be able to access to join using the CO-OP Network locator or the Alliant Credit Union finder. Start by checking whether your employer, school, union, or professional association sponsors a credit union. If not, look for community credit unions that serve your geographic area — many have open membership. Some credit unions have very low barriers to entry, such as requiring you to live or work in a specific county or to make a one-time donation to a nonprofit.

Once you find a credit union you can join, contact them to learn about membership requirements and open a share account. Most credit unions now allow you to open an account online, though some still require an in-person visit. You will need to provide identification, proof of address, and your Social Security number, just as you would at a bank.

NCUA insurance and account protection

Share accounts are insured by the NCUA, a federal agency similar to the FDIC (which insures bank accounts). The NCUA insures each account holder up to $250,000 per credit union. If you have multiple share accounts at the same credit union — for example, a regular share account and a share certificate (a credit union's version of a certificate of deposit) — the insurance covers up to $250,000 across all of them combined at that one credit union.

If you have accounts at more than one credit union, each account is insured separately up to $250,000. Joint accounts are also insured separately, so if you and your spouse each have a $250,000 share account at the same credit union, both are fully insured. The NCUA website has an insurance calculator that shows you exactly how much of your money is covered.

Share accounts versus share certificates

Credit unions offer two main types of savings products: share accounts and share certificates. A share account is a regular savings account with no fixed term — you can deposit and withdraw money whenever you want. A share certificate (also called a certificate of share or CD) is like a bank certificate of deposit: you agree to leave your money in the account for a set period (often three months to five years) in exchange for a higher interest rate. If you withdraw the money early, you pay a penalty.

Share accounts are better if you need access to your money without penalty. Share certificates are better if you have money you do not plan to use for a while and want to earn a higher rate. Some people keep both — a share account for emergency savings and a share certificate for longer-term goals.

Frequently Asked Questions

Do I need to have a job to open a share account?

No, though some credit unions require employment with a specific employer. Many community credit unions are open to anyone who lives or works in a geographic area, and some have even lower barriers. Check with credit unions in your area or that you are may be able to access to join to find out their membership requirements.

Can I lose money in a share account?

No. Your money is insured by the NCUA up to $250,000, and you earn interest on what you deposit. The only way you would lose money is if the credit union failed and your balance exceeded the insurance limit, which is extremely rare.

What happens to my share account if the credit union closes?

If a credit union fails, the NCUA steps in and protects your money up to $250,000. You will be able to access your insured funds, usually within a few business days. If your balance exceeds $250,000, the amount over the limit may not be recovered.

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

Yes. You can have accounts at both credit unions and banks. Each account is insured separately — your credit union share account is insured by the NCUA up to $250,000, and your bank savings account is insured by the FDIC up to $250,000.

How do I withdraw money from a share account?

You can withdraw money in person at a credit union branch, by ATM, by check, or by electronic transfer, depending on what the credit union offers. Some credit unions limit the number of withdrawals per month, though federal rules on this have relaxed in recent years. Check with your credit union about their withdrawal policies.