Guide to Share Savings Accounts

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

1. 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.
2. 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. 
3. 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)
4. 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

The Takeaway