![]() The NCUA insures credit union accounts, in the same way the FDIC protects bank customers, via the National Credit Union Share Insurance Fund (NCUSIF). Credit unions fall under the jurisdiction of the National Credit Union Administration (NCUA), which provides similar insurance and guidance to that of the FDIC, but for credit unions rather than banks. Banks that are members of the FDIC are proud to show it, with the FDIC logo featured prominently on their websites and marketing materials.Ĭredit unions are not insured by the FDIC. Congress to insure deposit accounts and provide support specific to banking stability, among other issues. Is a Share Draft Account FDIC Insured?īank deposits are insured by the Federal Deposit Insurance Corporation ( FDIC), an independent agency established by the U.S. Forbes Advisor’s list of best high-yield checking accounts includes both banks and credit unions. Some banks also offer interest-earning checking accounts. Some credit unions’ share draft accounts earn higher or lower dividends, depending on the organization and the annual percentage yields, or APY, being paid by banks and credit unions. interest), the idea is the same: receiving earnings on your money. While the name is slightly different (dividend vs. In the same way that owners of shares of company stock might receive a dividend, credit union members receive dividends on their savings or checking accounts. Credit unions refer to the interest or yield that they pay to members’ accounts as dividends, rather than interest, to reflect the role of membership in the credit union. One difference between a share draft account and a bank checking account is that credit unions’ share draft accounts usually pay interest-referred to as dividends, rather than interest, at credit unions-while most bank checking accounts do not. In fact, some credit unions’ share draft accounts rank among the best checking accounts available. Some credit unions may refer to their share draft accounts as checking accounts. You can use these accounts to write checks, make debit card purchases and make other payments and transactions through your account to manage your everyday spending. Checking AccountsĬredit union share draft accounts function in the same fundamental way as bank checking accounts. Because of this mission and structure, they return their profits to the organization members, helping to provide members with higher yields on savings accounts, lower interest rates on loans and other member benefits.īy naming their primary transactional accounts share draft accounts, credit unions are reminding their members of the organization’s mission: to literally “share” the profits with members, in a way that helps reduce costs and provide better services. Credit unions are not-for-profit cooperative organizations. It’s about a different way of delivering financial services. ![]() ![]() “Share draft account” is more than a name. Different types of credit union accounts may have the word “shares” in the name-such as share certificates instead of CDs, or share savings account instead of a bank savings account. When you have an account at a credit union, the money that you deposit into the credit union secures what are referred to as shares. A share draft account is similar to a typical bank checking account, but there are a few key differences that relate to the larger reasons why credit unions have a slightly different mission and focus than banks. There are a few reasons why credit unions use different names for similar products and services. So, when you sign up for a checking account at a credit union, they use the name share draft account to reflect both your ownership and that this is a transactional account. If you are considering becoming a member of a credit union, you may notice that credit unions use slightly different terminology than banks.Ī checking account tends to be your primary transactional account for everyday banking needs at a bank, but credit unions refer to this type of account as a “share draft account.” The reason for this name change? As a credit union member, you also are a shareholder and part-owner of the organization that holds your account. ![]()
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