A credit union checking account is called a share draft account

The account you use to write checks and make everyday payments at a credit union is called a share draft account. The name comes from how credit unions are structured: when you deposit money, you own a share of the credit union itself, and when you write a check, you are drafting against those shares.

Some credit unions use the term interchangeably with "checking account," and you will see both names on their websites and in their paperwork. The mechanics work the same way a bank checking account does — you deposit money, write checks, use a debit card, set up automatic payments — but the legal name reflects that you are a member-owner, not just a customer.

A few credit unions also offer a second type of transaction account called a NOW account (Negotiable Order of Withdrawal). These are less common than they used to be, but they function similarly to share draft accounts and may come with slightly different fee structures or interest rates. Ask your credit union which type they offer and what the differences are.

Key Takeaways

  • A share draft account is the official name for a checking account at a credit union, though many credit unions also call it a checking account on their materials.
  • The term "share draft" reflects that you own a share of the credit union as a member, and you are drafting against your ownership stake when you write checks.
  • Share draft accounts work identically to bank checking accounts for daily use — debit cards, checks, automatic payments, and direct deposit all function the same way.
  • Some credit unions offer NOW accounts as an alternative to share draft accounts, with potentially different fees or interest rates.

Why credit unions use a different name

Banks call their transaction accounts "checking accounts" because you are a depositor — you hand money to the bank, and the bank holds it. Credit unions call theirs "share draft accounts" because the legal relationship is different: you are a member-owner who has purchased a share of the credit union's assets.

This distinction matters for regulatory purposes. The National Credit Union Administration (NCUA) oversees credit unions and uses the term "share draft account" in its rules. Banks fall under the Federal Deposit Insurance Corporation (FDIC) or the Federal Reserve, which use "checking account" in their regulations. The different names reflect different regulatory frameworks, even though the day-to-day experience is nearly identical.

In practice, most credit union staff will understand if you call it a checking account, and most credit union websites use both terms so people can find what they are looking for. The share draft terminology is more precise legally, but it is not a source of confusion in everyday banking.

What a share draft account includes

A share draft account at a credit union typically comes with a debit card, check-writing privileges, and online banking access. You can set up direct deposit, automatic bill payments, and transfers to other accounts. Many credit unions offer overdraft protection, which links your share draft account to a savings account or line of credit so that overdrafts are covered automatically.

Interest rates on share draft accounts vary by credit union. Some offer no interest; others pay a small rate, especially if you maintain a minimum balance or meet other conditions like setting up direct deposit. Check your specific credit union's terms, because the rate and any balance requirements differ widely.

Fees also vary. Many credit unions charge no monthly maintenance fee on share draft accounts, which is one reason people choose credit unions over banks. Some charge a fee only if your balance drops below a minimum, or only if you exceed a certain number of transactions per month. Read the fee schedule before you open the account.

Share draft accounts versus savings accounts at credit unions

A credit union member typically has both a share draft account (for checking) and a share savings account (for storing money). The share savings account is your ownership stake in the credit union — it is the "share" part of the name. You must hold at least one share to be a member, and that share usually costs between $5 and $25.

The share draft account is separate and is where you keep the money you use for bills and everyday spending. Money in the share draft account is still insured by the NCUA up to $250,000, just as it would be at a bank under FDIC insurance. The two accounts serve different purposes: one is your membership stake, and one is your transaction account.

Opening a share draft account

To open a share draft account, you will need to become a member of the credit union first. This usually requires opening a share savings account and depositing the minimum share amount. You will also need to provide identification, proof of address, and sometimes proof of income or employment.

Some credit unions have field of membership restrictions — meaning you can only join if you work for a certain employer, live in a certain area, or belong to a certain organization. Others are open to anyone in their community. Check whether you are may be able to access to join before you start the process process.

Once you are a member, opening a share draft account is straightforward. You can do it in person at a branch, over the phone, or online, depending on what the credit union offers. You will choose your account features (like whether you want overdraft protection) and receive your debit card and checks within one to two weeks.

How share draft accounts are insured

Money in a share draft account is insured by the National Credit Union Administration (NCUA), a federal agency that works the same way the FDIC does for banks. Your deposits are covered up to $250,000 per account, per credit union. If the credit union fails, the NCUA guarantees your money up to that limit.

The insurance covers the share draft account separately from the share savings account. So if you have $200,000 in your share draft account and $100,000 in your share savings account at the same credit union, both are fully insured because they are different account types. If you have multiple share draft accounts at the same credit union, they are added together for insurance purposes.

Frequently Asked Questions

Can I use a share draft account the same way I use a checking account at a bank?

Yes. You can write checks, use a debit card, set up direct deposit, and make automatic payments. The only difference is the name and the fact that you are a member-owner of the credit union rather than a customer of a bank. The day-to-day experience is identical.

Do I have to keep money in a share savings account if I have a share draft account?

Yes. To be a member of a credit union, you must own at least one share, which means you must have a share savings account with a minimum balance (usually $5 to $25). You can keep that account separate from your share draft account and use only the share draft for spending.

What happens if my share draft account is overdrawn?

That depends on your credit union's overdraft policy. Some credit unions automatically transfer money from your share savings account to cover the overdraft. Others charge an overdraft fee. Some do both. Read your account agreement or ask your credit union what happens if you overdraw.

Is a share draft account insured the same way a bank checking account is?

Yes, but by a different agency. The NCUA insures credit union accounts up to $250,000 per account type, just as the FDIC insures bank accounts. The coverage is equivalent; only the insuring agency is different.

Can I have more than one share draft account at the same credit union?

Most credit unions allow you to have multiple share draft accounts, though some limit you to one. If you do have more than one, they are combined for NCUA insurance purposes, so your total coverage across all share draft accounts at that credit union is $250,000, not $250,000 per account.