
A share draft account, also known as a checking account, is a type of deposit account that allows you to write checks to pay for goods and services.
Share draft accounts are designed for everyday use, making it easy to manage your finances. They typically come with a debit card and checks, allowing you to access your money whenever you need it.
You can open a share draft account with a minimum deposit, which varies depending on the bank or credit union. Some banks may require a higher minimum deposit for certain types of accounts.
Suggestion: Draft Letter to Close Bank Account
What is a Share Draft Account?
A share-draft account is a type of account offered by credit unions that's similar to a checking account.
It's created under the Consumer Checking Account Equity Act of 1979, which means it's been around for a while.
Share-draft accounts allow you to access your share balances by writing drafts on your account, and you can write an unlimited number of checks against your account.
Related reading: What Are B Shares

One of the primary benefits of share-draft accounts is that they're secured with federal insurance by the National Credit Union Administration (NCUA).
Interest earned on share-draft accounts is compounded quarterly, which means you'll earn more interest over time.
In practice, a share-draft account operates almost exactly like a checking account, with debit cards that can be used to make purchases and withdrawals.
You can use your debit card to make point-of-sale (POS) purchases, withdraw money from ATMs, or shop online, just like you would with a regular checking account.
By depositing money into a credit union share-draft account, you're technically buying shares in that credit union.
Explore further: Federal Bank Demand Draft
Features and Benefits
Share draft accounts are a type of account that earns interest, often called dividends at credit unions, and comes with low or no monthly fees. This is a significant advantage over many bank checking accounts, which often come with monthly maintenance fees that can be up to $15 or more per month.
Discover more: Account Maintenance Fee Bank of America

Credit unions, the institutions that offer share draft accounts, are not-for-profit organizations that distribute all profits to their members in the form of dividends. This means that members can earn interest on their deposits, which can be compounded quarterly.
Share draft accounts also have specified membership requirements, which can be a drawback for some people. However, this is a trade-off for the benefits of low or no fees and the opportunity to earn interest on deposits.
Here are some key features of share draft accounts:
Overall, share draft accounts offer a range of benefits that can make them an attractive option for people looking for a low-fee, interest-earning account.
Additional reading: One - Mobile Banking
Types of Share Draft Accounts
Share draft accounts are offered by credit unions and are similar to bank checking accounts. They allow account holders to access their share balances by writing drafts on their accounts.
One of the primary benefits of share draft accounts is that they are secured with federal insurance by the National Credit Union Administration (NCUA). This means that account holders' funds are protected up to a certain amount.
Broaden your view: I M B Bank Share Price Today

Share draft accounts allow for an unlimited number of checks to be written, making them a convenient option for everyday expenses. Account holders can also use their debit cards to make purchases, withdraw money from ATMs, or shop online.
Here are some key features of share draft accounts:
- NO minimum balance required
- NO monthly service charge
- FREE ATM card or debit card
- First order of checks is FREE
Interest earned on share-draft accounts is compounded quarterly, providing a small return on investment for account holders.
Bright Star Checking (13-24)
The Bright Star Share Draft (Checking) Account is a great option for young adults aged 13-24. NO minimum balance is required, which means you can open the account with any amount of money.
This account is also fee-friendly, with NO monthly service charge. You won't have to worry about paying extra just for having the account.
If you need to access your money, you'll get a FREE ATM card or debit card, which is super convenient. First-time account holders also get a free first order of checks, which is a nice perk.
Suggestion: Zerodha Account No
Checking vs Checking

Checking accounts at banks often come with fees and minimum balance requirements. You might have to pay a monthly fee or keep a certain amount of money in your account to avoid charges.
Between 1933 and 2011, demand deposit checking accounts in the US weren't allowed to earn interest. Now, some bank checking accounts offer interest, but it's not as common as earning interest on savings accounts.
Credit unions, on the other hand, don't charge monthly fees or require minimum balances in share-draft accounts. This is a big advantage for consumers who want to avoid paying fees or keeping a lot of money in their account.
Some credit unions have low fees, but they often don't charge anything. This makes them a great option for people who want to save money on banking fees.
If you're looking for a checking account with no fees, you might want to consider a credit union. Just make sure to check their requirements and fees before opening an account.
Here are some key differences between bank checking accounts and credit union share-draft accounts:
How to Open a Share Draft Account

To open a share draft account, you'll need to meet the eligibility requirements of the credit union. This may involve living in a specific region, working in a certain job sector, or being involved in a particular organization.
First, make sure you have the necessary documents. You'll need a government-issued photo ID, your Social Security number, and proof of address, such as a bill with your name on it.
You may also need to provide credit union-specific documents, like military identification if you're applying to a credit union that serves military personnel.
To get started, you can fill out an application at the credit union's local branch or, in some cases, apply online.
Here's a list of the documents you'll typically need to open a share draft account:
- Government-issued photo ID
- Social Security number
- Proof of address (such as a bill with your name on it)
- Credit union-specific documents (if required)
Once you've gathered all the necessary documents, you can take them to the credit union branch and open your share draft account.
Pros and Cons
Share draft accounts have their advantages. The initial deposit requirements are often low.

Some share draft accounts can earn dividends, which is a nice perk. You might be able to earn up to 4.00% APY on savings balances.
Banking fees may be lower with a share draft account. No account or overdraft fees are a big plus.
You can access your money through various means, including online and mobile banking, ATMs, and branches. Some credit unions even offer shared branch banking, which can be super convenient when traveling.
Qualifying for membership in a credit union might be the biggest hurdle for some people. However, there are some credit unions with less stringent requirements.
Intriguing read: How to Earn Money Online without Investment in Mobile
Fees and Insurance
Fees are a big part of how banks make a profit, but credit unions, being not-for-profit financial institutions, generally charge their members fewer fees.
Credit unions can also pay higher interest rates on deposit accounts than traditional banks.
Banks and credit unions both offer deposit insurance to protect your money in case of institutional failure.
Broaden your view: Do Credit Unions Have Safety Deposit Boxes
Fees

Banks are notorious for charging a plethora of fees for their checking accounts, which is a significant source of their revenue. Fees are a big part of how banks make a profit.
Credit unions, on the other hand, are not-for-profit financial institutions that generally charge their members fewer fees and can offer higher interest rates on deposit accounts than traditional banks.
Some credit unions even offer NO FEE Share Draft (Checking) Accounts, which come with perks like no monthly service charge and a free ATM card or debit card.
To qualify for these benefits, you may need to maintain a minimum balance, such as the $300.00 required by some credit unions.
Here's a comparison of the fees associated with different types of accounts:
Overall, credit unions are a more attractive option for consumers looking to avoid paying fees or maintaining minimum balances, especially with their low-fee or no-fee accounts.
Deposit Insurance
Deposits at banks and credit unions can be insured against institutional failure.

Deposits are insured by either the FDIC or NCUA, depending on where you keep your accounts. Credit unions are likely insured by NCUA.
The FDIC insures deposits for up to $250,000 per depositor, per account ownership category, per insured financial institution.
You may qualify for more deposit insurance if you have accounts in different ownership categories that meet FDIC requirements.
Deposits held in jointly-owned accounts at member credit unions are also insured up to $250,000.
Discover more: Wealthfront Is Fdic Insured
Frequently Asked Questions
What is the difference between a share account and a share draft account?
A share account represents partial ownership in a credit union, while a share draft account is a way to access the value of those shares through checks and other transactions. In other words, share draft accounts are like checking accounts, but with a unique ownership twist.
Is a share draft account interest earning?
Yes, a share draft account earns interest, unlike many checking accounts. Interest is paid on shares held by account holders.
What is a share account at a credit union?
A share account at a credit union represents an individual's ownership and can be either a savings or checking account, also known as a share draft account. It's a type of account that allows you to own a part of the credit union and access its financial services.
What is a share draft on a bank statement?
A share draft on a bank statement is a type of account used by credit unions to access funds, similar to a personal checking account at a standard bank. It allows individuals to manage their money and make transactions.
What is a share draft loan?
A share draft loan is not a type of loan, but rather a type of account used to access funds at a credit union. If you're looking for information on loans offered by credit unions, we'd be happy to help with that.
Featured Images: pexels.com