As little as $5 can make you a partial owner of an organization. Interesting, right? The opening deposit for a share account is usually relatively low, often as little as $5. Primary share accounts can help you become a credit union member. With this, each shareholder becomes a partial owner, unlike banks, where you’re a customer despite how much business you do with them. But, is there a difference between a Primary Share Account and a Savings Account? Is a Primary Share Account a Savings Account? Let us learn more about primary share accounts and savings accounts. Also, check out Beem to get updated interest rates and compare the best high-yield savings accounts that match your savings goals.
Is a Primary Share Account The Same as a Savings Account?
Yes, a primary share account and a savings account differ in how they serve you daily. But they are different in representation. In a credit union, its members are partial owners of the organization, and they impact the actual interest of the organization.
However, a customer in the bank can only participate in actual interest by what they pay for services offered. Banks are controlled by their board members, while credit unions are run by their members together.
Share Savings Account vs. Bank Savings Account
Here are some differences between a share savings account and a bank savings account:
| Share Savings Account | Bank Savings Account |
| An account with a share savings feature represents membership and ownership in a credit union. | When you open a savings account at a bank, you do not become a part-owner. |
| As part of the credit union’s profits, dividends are earned on share savings accounts. | A bank’s savings account earns interest, not dividends, with online banks typically offering the best rates. |
| Share savings accounts can be opened with as little as $5. | Some banks require no minimum deposit to open a savings account, while others require $100 or more. |
| NCUA insures credit union share savings accounts. | A member bank’s savings account is certified by the FDIC. |
| Credit union members can access their accounts at other credit unions without incurring additional fees through shared branch banking. | It is possible for banks to charge fees for accessing accounts at branches or ATMs of other banks. |
Benefits of a Primary Share Savings account
- Earn dividends on your balance over $5.
- Easy access to your money at many branches.
- Online and mobile banking for convenient account management.
- Your money is insured up to $250,000.
Why Does It Matter What You Call a Share Account?
In a credit union, members hold a financial stake in the organization. The “share” in question refers to your financial share. Savings accounts represent your credit union share, which is why they are called “share accounts”. In a credit union, checking accounts are termed “draft share accounts” since checks can be drafted from them.
The language difference between banks and credit unions keeps you aware of the critical difference between them: credit unions have a mission to provide members with financial services. Unions exist to serve their members, which is you, while banks exist to serve their shareholders, not you.
Are Share Savings Accounts FDIC Insured?
The Federal Deposit Insurance Corporation does not insure those accounts. Instead, credit unions insure their deposit accounts through the National Credit Union Administration (NCUA). The FDIC protects Member banks up to $250,000 per account owner, depositor, and financial institution.
In contrast, the NCUA’s Share Insurance Fund covers up to $250,000 individual accounts. A credit union member’s joint accounts are also insured up to $250,000.
Conclusion
Is a Primary Share Account a Savings Account? An alternative to traditional bank savings accounts might be a share savings account. While credit union shares and bank savings accounts serve you in much the same way, there is a significant difference beyond branding. Consider the benefits a credit union offer, such as interest rate discounts on loans, when deciding which one to join. Meanwhile, use Beem to compare the best high-yield savings accounts that aligns with your financial goals and enhance your savings prospects.
FAQs
Is a share draft account the same as a savings account?
The answer is yes and no. They are similar in purpose but different in representation. Share saving accounts make you a partial winner in the organization, while a bank only treats you like a customer, not the owner.
What is a primary share account at a credit union?
A Primary Share account serves as your basic savings account. In addition to its $5 minimum balance, it earns dividends on all balances above that without a maximum.
What counts as a savings account?
With a savings account, you can earn interest on the money you’ve saved for future needs. You can write checks or make purchases and ATM withdrawals using your debit card, but it’s different from a checking account, which allows you to make everyday purchases.
What is the difference between a share account and a checking account?
“Draft share accounts” are checking accounts at credit unions from which you can draft checks. Your savings account represents your credit union share, hence the term “share account.”
