Legal Definitions - share account

A share account, often referred to as a share-draft account, is the equivalent of a checking account offered by a credit union. When you deposit money into a share account at a credit union, you are technically purchasing "shares" in the institution, making you a part-owner. This account allows members to deposit and withdraw funds, typically using share drafts (which function like checks), debit cards, or electronic transfers, for everyday transactions and bill payments.

• Example 1: Daily Spending and Bill Payments

  Scenario: Maria recently joined a local credit union and opened a share account. She uses her debit card linked to this account to buy groceries, pay her utility bills online, and withdraw cash from ATMs.

  Explanation: This illustrates a share account's primary function as a transactional account for daily expenses. Maria's deposits are her "shares," and her use of the debit card and online payments are methods of "drafting" funds from these shares, just like using a checking account at a traditional bank.

• Example 2: Direct Deposit and Automatic Transfers

  Scenario: David receives his bi-weekly paycheck via direct deposit into his share account at the credit union. He also has an automatic transfer set up to move a portion of these funds from his share account into his credit union savings account each month.

  Explanation: This demonstrates how a share account serves as a central hub for managing income and expenses. The direct deposit adds to his "shares," and the automatic transfer is a form of "drafting" or moving funds between his credit union accounts, highlighting its role in personal financial management.

• Example 3: Funding a Loan or Other Services

  Scenario: Sarah took out a car loan with her credit union. To make her monthly payments, she ensures there are sufficient funds in her share account, from which the credit union automatically deducts the payment on the due date.

  Explanation: This shows a share account's utility beyond simple spending. It acts as the primary transactional account within the credit union ecosystem, facilitating payments for other services like loans. The funds in her share account are her "shares" that she uses to fulfill her financial obligations to the credit union.