Guide to Share Savings Accounts
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What Is a Share Savings Account?
How Do Share Savings Accounts Work?
Benefits of Opening a Share Savings Account
Higher rates and lower fees Because a credit union can give a portion of its profits back to its members, a share savings account typically offers a higher return than a traditional bank savings account. Credit unions also typically charge lower or fewer fees. A focus on good service Because they’re member-owned, nonprofit institutions, you may find a greater focus on providing personalized service at a credit union than at some for-profit banks. Range of products Once you become a member of a credit union by opening a share savings account, you will typically have access to many other useful financial products and services, including health savings, individual retirement accounts (IRAs), business accounts, credit cards, and myriad loans — everything from auto loans to home mortgages. You may be able to manage many aspects of your financial life through your credit union. Deposit Insurance The money you deposit in a share savings account at a federally insured credit union is automatically covered by the National Credit Union Administration (NCUA). That means if the credit union fails, you’ll be covered for up to $250,000 as an individual depositor.
Drawbacks of Opening a Share Savings Account
Limited access Some credit unions may have a limited number of physical locations centered in a specific geographical area, which might be an issue if you travel frequently and like to have access to a physical branch. However, credit unions typically offer broad access to ATMs or offer fee reimbursements when using another financial institution’s ATM. Membership requirements Some credit unions only serve specific employers, geographic areas, or groups (like schools, churches, or labor unions). You may have to do some research to find a credit union you’ll be able to join. Deposit insurance may not be government-backed Some credit unions aren’t covered by the NCUA’s deposit insurance but are privately insured. This is something to keep in mind as you comparison shop various savings account offers. Online banks may be more competitive Because their overhead is typically lower than financial institutions that have brick-and-mortar locations, online banks may be able to offer higher rates on their high-yield savings accounts, and also typically have low or no fees.
Opening A Share Savings Account
Find a credit union. There are typically membership requirements to join a credit union. In some cases you may need to be affiliated with a certain profession, military association, school, or religious group. In others, you simply need to live in a certain geographic area. You may need to do a little digging and ask around. You can also use the NCUA’s search tool to find a credit union. Become a member of the credit union. Once you find the right fit, you’ll need to become an official member. This may require paying a small fee (often $5 to $25) to purchase your share. Open an account. In some cases, you need to open a share draft account before you can open your share savings account. To open either type of account, be prepared to provide some personal information and documentation, including your: Driver’s license or other government-issued identification (such as a passport) Social Security number Date of birth Current address (and proof that it’s your address if it differs from your ID) Contact information (phone and email) Checking account information (if you’re using your checking account to fund your savings account or linking the two accounts) Designated beneficiary (if it’s an individual account) Fund the account. If you open the account in person, you can use cash or a check. If you’re applying online, you can transfer funds from another account or you may be able to make a mobile check deposit.
What is a Share Draft Account?
Other Types of Share Accounts
Share certificate of deposit (CD) Also called a “share certificate,” these accounts typically offer a higher return on your savings than a share savings account but require you to leave your money on deposit for a set period of time. Share money market account Like a traditional money market account, this typically comes with checks and a debit card, making it like a hybrid checking-savings account. These accounts also typically pay higher dividends than a regular share savings account. However, they usually require a higher minimum deposit and ongoing balance. Specialty accounts Just like banks, credit unions may offer several specialty accounts, including accounts geared toward children, teens, and students; business accounts; and health savings accounts (HSAs).
Are Share Savings Accounts FDIC Insured?
Share Savings Account vs Bank Savings Account
Nonprofit vs Profit
“Members” vs. “Customers”
NCUA-insured vs FDIC-insured
Frequently Asked Questions
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