What Is a Membership Share Account in a Credit Union?

A membership share account is a foundational component of joining a credit union. It represents a member’s ownership stake, distinguishing credit unions from traditional banks. Members are not just customers, but part-owners of a cooperative, non-profit organization. This ownership underpins the credit union’s operational philosophy.

Understanding the Membership Share Account

A membership share account serves as the primary savings account establishing individual membership in a credit union. This account sets credit unions apart from banks, typically owned by shareholders. Unlike banks that aim to generate profits for investors, credit unions operate as financial cooperatives, returning surplus earnings to members through various benefits.

Earnings on these accounts are referred to as “dividends,” rather than “interest.” Dividends are typically calculated on the average daily balance and can be paid monthly, quarterly, or annually. Credit unions require these accounts to build capital, foster member engagement, and uphold their cooperative mission, focusing on members’ financial well-being.

Deposits in membership share accounts are insured by the National Credit Union Administration (NCUA). The NCUA is an independent federal agency that insures deposits up to $250,000 per individual depositor. This federal insurance provides security, similar to how the Federal Deposit Insurance Corporation (FDIC) insures bank deposits. This coverage protects members’ funds, reinforcing confidence in the credit union system.

Becoming a Credit Union Member

Becoming a credit union member involves meeting specific eligibility criteria, often called a “common bond.” These criteria can include affiliations such as living, working, or worshipping in a particular geographic area, employment with a specific company, or membership in certain organizations. Some credit unions also extend eligibility to family members of existing members. Eligibility requirements are usually found on the credit union’s website or by contacting them directly.

To apply for membership and open a membership share account, individuals need to provide personal information and documentation. This commonly includes a valid government-issued photo identification, such as a driver’s license or passport, and proof of address like a utility bill or bank statement. A Social Security Number or Individual Taxpayer Identification Number is also typically required.

A small initial deposit into the membership share account is usually required to activate membership. This deposit, often ranging from $5 to $25, signifies the member’s purchase of a share in the credit union. This initial funding can be made through cash, check, or electronic transfer. The application process can be completed online or in person, involving an application form and required documentation.

Managing Your Membership Share Account

After opening a membership share account, members typically need to maintain a minimum balance to keep their account active. This minimum balance can vary by credit union and account type. Account statements reflect the calculation and payment of dividends, which are often paid monthly or quarterly, based on the account’s average daily balance.

Members can access and manage their account information through various channels. These include online banking platforms, mobile applications, in-person visits to credit union branches, and ATM networks. These options provide flexibility for members to monitor balances, review transactions, and perform other banking activities.

Holding a membership share account typically grants members voting rights within the credit union. This democratic control allows members to participate in the credit union’s governance, such as electing the board of directors. Each member usually has one vote, regardless of the amount of money held in their account, emphasizing the “one member, one vote” principle. This structure ensures decisions are made with members’ collective interests in mind.