Definition and Examples of Share Accounts
How Share Accounts Work
Other Types of Share Accounts
Definition and Examples of Share Accounts
A share account is a savings or checking account at a credit union. Share savings accounts pay variable dividends, which are equivalent to the interest of a bank account. Share checking accounts, also known as share draft accounts, are liquid and intended for daily payments and spending.
Key points to remember:
- A share account at a credit union is equivalent to a savings or checking account at a bank and refers to the member’s share.
- Many share accounts (but not all) are insured for deposits up to $250,000.
- Share accounts can be used as collateral for a loan.
- Accounts can be set up individually or jointly.
How Share Accounts Work
Credit unions differ from banks in that each account holder is an owner of the institution. As an owner, you have a voice in the management of the credit union, and you can vote on various issues and help elect the board of directors. Generally, it does not matter whether you have more or less money than anyone else in your account – every member is treated the same way and gets one vote.
Note: If you know savings accounts at banks, you already understand the basics of share savings accounts. The terminology differs because you open your account through the credit union, but the way you use the account is the same.
Your money is just as safe in an insured credit union in the U.S. as it is in an FDIC-insured bank account. Deposits are protected up to $250,000 per depositor, per institution. However, not all credit unions are insured by the federal government, so you should verify.
Don’t confuse a share account with a share account (which you share with someone else). The term “share” refers to your ownership stake in the credit union. Although you can have a joint share savings account, share accounts can also be individual accounts.
Other Types of Share Accounts
Learn several additional terms when starting to use the credit union:
- Certificates of Deposit (CDs): Look for “share certificates” if you want to increase your earnings. These certificates will require that the money be held in the deposit for specific periods of time.
- Retirement Accounts: Retirement accounts often also refer to shares, but standard abbreviations like “IRA” should help you identify the type of account you have.
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Sources:
- MyCreditUnion.gov. “Share Insurance Toolkit for Consumers.” Accessed Nov. 29, 2021.
- National Association of Federally-Insured Credit Unions. “Reserve Requirements and Regulation D; COVID-19 FAQs Available.” Accessed Nov. 29, 2021.
Source: https://www.thebalancemoney.com/what-is-a-share-account-315405
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