Pentagon Federal Credit Union
Log In Accounts
Search
  • Routing # 256078446
  • Partners
  • Member Discounts
  • Wealth
  • Foundation
  • ATMs & Branches
  • About
  • Search
  • Checking & Savings
    • Checking
      • Free Checking
      • Access America Checking
      • All Checking Accounts
    • Savings
      • Premium Online Savings
      • Regular Savings
      • All Savings Accounts
    • Certificates
      • Money Market Certificate
      • Coverdell Education Certificate
      • All Certificates
    • IRAs
      • IRA Certificate
      • IRA Savings Account
      • All IRAs
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
    • Special
      • Access America Checking - Earn more and Get paid early.
  • Credit Cards
    • Our Cards
      • Credit Cards Overview
    • How Can We Help?
      • Contact Us
      • Disclosures
      • Resource Center
    • Special
      • Choose the perfect card - Open Now
  • Auto
    • Auto Loans
      • Purchase
      • Refinance
      • Car Buying Service
    • Protection
      • Vehicle Protection
      • GAP Coverage
      • Debt Protection
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
    • Special
      • Score up to $350 on your auto loan
  • Mortgage & Home Equity
    • Home
      • Mortgage Home
    • Purchase
      • Apply for a Mortgage
      • PenFed Homes
      • First Time Homebuyer
      • Mortgage Pre-approval
    • HELOC & Refi
      • HELOC
      • Mortgage Refi
    • Loan Types
      • Conventional Loan
      • FHA Loan
      • VA Loan
      • Jumbo Loan
      • VA Refi Loan
    • Tools & Resources
      • Knowledge Center
      • Mortgage Media
      • Mortgage Calculators
      • Contact
    • Special
      • Spring Mortgage savings event!
  • Loans
    • Personal Loans
      • Overview
      • Debt Consolidation
      • Credit Card Consolidation
      • Home Improvement
      • Additional Uses
    • Student Loans
      • Student Loans
    • How Can We Help?
      • Contact Us
      • FAQs
      • Forms
    • Special
      • Personal Loans made easy online
  • Learn
    • Learning Hub
      • Learning Center
      • Mortgage Knowledge Center
      • Financial Assistance Center
      • Natural Disaster Relief Assistance
    • About PenFed
      • About
      • New Members
      • Sponsors
      • FAQs
      • Forms
    • Security & Fraud
      • Security Center
    • How Can We Help?
      • Careers
      • Contact Us
    • Special
      • Learn how we protect your data
  • Join Now
  • Log In
  • Accounts
  • Resources

LEARNING CENTER

To get ahead you have to stay informed.
  1. Home
  2. Learning Center
  3. Why Is It Called a Share Account?

CHECKING / SAVINGS

Why Is It Called a Share Account?

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

EXPECTED READ TIME: 4 MINUTES

Published: December 5, 2014

Updated: December 3, 2024

While credit unions and banks perform many of the same financial functions, terminology surrounding the two can be quite different.

For example, credit unions serve the needs of their members, while banks refer to their account holders — or simply their customers. Credit unions also use different names for the accounts they offer. For example, credit union members have share accounts while bank customers have checking and savings accounts.

If you’ve ever wondered what a credit union share account is and why each institution describes such similar services so differently, we’re here to unravel the mystery and explain why it matters.

What We’ll Cover

  • What Is a Share Account at a Credit Union?
  • Why the Name “Share Account” Matters
  • The Benefits of Being a Credit Union Shareholder
  • FAQs
Infographic

What Is a Share Account at a Credit Union?

Credit union members have “share draft accounts” and “share accounts” while bank customers have “checking” and “savings accounts,” but there’s virtually no difference in how these accounts serve you in your daily life.

The difference is in what these accounts represent. When you put your money in a bank, you’re a customer with no actual interest in the bank’s survival as an institution beyond the services you pay for with fees, but when you join a credit union, you’re actually becoming a partial owner in the organization. That’s because credit unions are owned and operated by their members (who together elect a volunteer Board of Directors that runs the organization).

Mobile app

Learn how mobile banking can improve your money management.

Take Me There

Why the Name “Share Account” Matters

Why don’t credit unions keep things simple with just “checking” and “savings”? Since credit union members hold a financial stake in the union, the “share” in question is your financial share in the organization.

So, 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 at a credit union are called “draft share accounts” because they’re share accounts you can draft checks from. Nowadays you can also make purchases with debit cards linked to your share draft account and even take advantage of online banking.

Credit unions operate using their members’ money and return any profits they make to their members.

It may seem like a minor detail, but the language difference between credit unions and banks serves to remind you of the key difference between the two: credit unions exist to serve their members (that’s you!), while banks exist to serve their shareholders (not you).

Your savings account represents your share of the credit union — thus, it’s called a “share account” (or sometimes a share savings account).

Bank Shareholders vs. Credit Union Shareholders (Members)

Banks are run by outside shareholders (also called stockholders) who invest large amounts of money in the bank. While shareholders may make decisions that benefit bank customers, their main goal is for the bank to make money. After all, when the bank makes money, the shareholders split those profits.

In contrast, credit union members occupy both roles — the customer and the shareholder. This means they maintain personal accounts with the credit union and they also have the right to vote on decisions that shape the institution. They can elect members of the volunteer board of directors who make day-to-day decisions, and when the credit union turns a profit, that money is returned to the credit union’s members.

choose-right-loan icon

Choosing a new checking account? Here’s what to look for.

Learn More

Interest vs. Dividends

Instead of interest, a credit union share account (where you keep your savings) earns you dividends. So, the same way a share account reflects your ownership in your credit union, the word “dividend” reflects that you’ve earned a portion of the credit union’s profits.

As cooperatives, credit unions seek ways to make life better for their members.

The Benefits of Being a Credit Union Shareholder

The main benefit of belonging to a credit union is that you, as a shareholder, can influence the organization’s decisions. Through voting, you can help elect leadership that reflects your values. But there are many other benefits, too.

One appealing feature of credit unions is that they operate using their members’ money and return any profits they make to their members. This happens through:

  • Lower interest rates on loans and credit cards
  • Higher dividends (interest rates) on savings accounts
  • Dividends on checking accounts
  • Fewer (and often lower) fees

But the benefits of credit union membership don’t stop there. As cooperatives, credit unions seek ways to make life better for their members, both financially and in other areas of members’ lives. As a credit union member, you can look forward to:

  • Financial education (including classes, workshops, and financial counseling)
  • Membership discounts and savings
  • Greater community investment
  • Unwavering commitment to you and other members
Instead of interest, a credit union share account (where you keep your savings) earns you dividends.

FAQs

Credit unions are not-for-profit financial institutions. They offer the same services as banks, including storing money in checking and savings accounts, providing loans, and cashing checks. As with banks, the money in credit unions is federally insured.

The main difference between credit unions and banks is that credit unions are owned by their members, while banks are for-profit institutions owned by shareholders.

Some people prefer credit unions over banks because of their unique benefits. Credit unions usually offer higher dividend (interest) rates on accounts, lower fees on loans, and special discounts and benefits for their members. The profit banks earn goes to their shareholders, while any profits credit unions earn are returned to members in the form of higher dividend rates, lower fees, or discounts.

The biggest differences between credit unions and banks are:

  • Credit unions are not-for-profit institutions, while banks are profit-driven
  • Credit unions are owned by their members, while banks are owned by private shareholders
  • Credit union members can vote and have a say in how the institution runs, while bank customers cannot

 

Your money is equally safe in a credit union or bank. Deposits accounts (such as checking, savings, and certificates) are federally insured up to $250,000 per account holder at both credit unions and banks. Credit unions are insured by the National Credit Union Administration (NCUA) while banks are insured by the Federal Deposit Insurance Corporation (FDIC).

A share savings is a savings account at a credit union. You can deposit money in a share savings account and earn dividends on it just like you would earn interest on money in a savings account at a bank.

“Regular share account” and “primary share account” are alternate names for a share savings account. They’re basic savings accounts held at a credit union that are useful for emergencies, managing cash flow, or saving for specific goals.

Credit unions often refer to checking accounts as share draft accounts because you can draft — meaning to spend or withdraw money — from them. “Share” refers to the account owner’s stake in the credit union, and “draft” indicates that it’s a checking account rather than a savings account.

faq icon

Need help with an existing PenFed account? Our help center has answers.

Get Assistance

The Takeaway

Even though they serve you in just about the same way, the differences between credit union share accounts and bank savings accounts go far beyond branding. Credit unions use different language to remind you of the role you play in being a member, which is great because being a member of a credit union has a lot of benefits.

Learn More About Becoming a Credit Union Member

Discover the diverse offering of products, services, and support available to our members.

Learn More

SIMILAR ARTICLES

How to Switch Banks or Credit Unions

Changing your bank or credit union is easier than you realize and could carry important benefits around saving and convenience.

Man checking mobile infront of the laptop and using credit card

Is a Savings Account Worth It?

A savings account is one of the most versatile financial tools around. Learn why a savings account is worth it and how to get the most from yours.

woman with her hand on a piggy bank

What To Expect From Your Checking Account

Information on checking account basics and what you can expect from work with a credit union.

A man writing on a cheque

How to Choose a Checking Account

With so many options available, how do you choose the right checking account? Click to learn what features matter the most.

Woman typing on her laptop
  • ATMs & Branches
  • Careers
  • Foundation
  • Contact Us
  • Security Center

This credit union is federally insured by the National Credit Union Administration. Rates are current as of May 2025 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


  • facebook
  • twitter
  • linkedin
  • youtube
  • instagram
Download the PenFed app on Apple Store Download the PenFed app on Google Play
Read More about Equal Housing
Routing #256078446

©2025 Pentagon Federal Credit Union

Privacy
Disclosures
Fees
Rates
Forms
Site Map

Head’s Up!

You are about to visit a third-party site not affiliated with PenFed.org.

penfedcu.sparrowfi.com sparrowfi.com penfed and traveller logo penfed and seguros logo penfed and national car logo penfed and trustage logo PenFed and CampusDoor logo PenFed and Ascent logo PenFed and Ascent logo penfed and househappy logo penfed and benefit services logo penfed and chubb logo penfed and alpha logo penfed and crutchfield logo penfed and ftd logo

This content is from a third-party website. PenFed Credit Union is not responsible for its information.

Continue

Get Started

×

LOGIN

JOIN