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Why Is It a Share Account Instead of a Savings Account?

What you'll learn: The differences between share and savings accounts


While credit unions and banks perform many of the same financial functions, the terminology surrounding the two can be quite different. For example, credit unions talk about their members while banks talk about their account holders — or simply their customers. Credit union members have share accounts while bank customers have checking and savings accounts. If the services offered by these two types of organizations are so similar, why is are the words used to describe them so different?

The answer comes down to just what banks and credit unions are. Going back to the terms we were talking about, a share account at a credit union is just like a savings account at a bank, while a share draft account at a credit union is just like a checking account at a bank. Why don’t credit unions keep things simple with just “checking” and “savings”? It’s because the “share” in question is your financial share in the organization. At a credit union you aren’t just a customer: you’re a member with a financial stake in the union.

When you put your money in a bank, you’re a customer, just like anyone else — and the terms “savings” and “checking” describe financial products you’re using (and paying for, in one way or another). But putting your money in a credit union is more than just handing over a check: when you join a credit union, you’re becoming a member and partial owner in the organization. Credit unions are owned and operated by their members, who elect the volunteer Board of Directors that run the organization.

Just what does this have to do with what your account is called? Your savings account represents your share of the credit union, thus it’s called a “share account” (or sometimes a share savings account). Checking accounts are “draft share accounts” because they’re share accounts you can draft checks from (and more, like use online bill pay and debit cards).

This may seem like a minor thing, but the language difference between credit unions and banks serves as a reminder of the key difference between the two: credit unions exist to serve their members (that’s you!), while banks exist to serve their shareholders.

Looking to make the switch from a bank to a credit union? We have some advice on how to make the transition from bank to credit union as easily as possible. If you’re looking to join PenFed, the first step is filling out our Membership Application.

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