What Is a Regular Share Account at a Credit Union?

Credit unions operate as member-owned, not-for-profit financial institutions. This cooperative structure distinguishes them from traditional banks. A “regular share account” is a foundational element of credit union membership, representing a member’s ownership stake in the institution.

Understanding the Share Account Foundation

A regular share account functions as the primary savings vehicle at a credit union. Its establishment signifies more than just opening a savings account; it creates a direct membership connection, making the account holder a part-owner of the credit union. This ownership is symbolized by a “share,” which is a small equity contribution, often a minimum deposit ranging from $5 to $25, as defined in the credit union’s bylaws.

Instead of interest, share accounts earn “dividends,” representing a portion of the credit union’s earnings returned to its members. The credit union’s board of directors determines dividend rates, influenced by the institution’s financial performance and market trends. These dividends are generally considered taxable income, and credit unions typically issue a Form 1099-INT if the dividends earned are $10 or more in a calendar year, similar to how interest income is reported. All deposits in federally insured credit unions, including those in regular share accounts, are protected by the National Credit Union Administration (NCUA) up to $250,000 per member, per insured credit union, for each account ownership category.

Managing and Accessing Your Funds

Members can add funds to a regular share account through direct deposit, electronic transfers, or by depositing cash and checks at credit union branches or ATMs. Many credit unions also offer mobile check deposit through their mobile banking applications.

Accessing funds from a regular share account is done through ATM withdrawals, in-branch transactions, or transfers to other linked accounts. Federal regulations limit withdrawals or transfers from savings accounts, including share accounts, to six per calendar month or statement cycle. Exceeding this limit can lead to fees or, in some cases, the account being reclassified or closed. Account management is available through online banking portals, mobile applications, phone banking, and in-person services at branches.

Share Accounts Versus Other Savings Products

A regular share account differs from other financial products. Unlike a checking or “share draft” account, which is for daily spending, a regular share account is designed for savings and serves as the initial membership account. Other credit union savings options, such as money market accounts, often require higher balances for improved rates and may offer limited check-writing privileges. Certificates of deposit (CDs) or “share certificates” lock funds for a fixed term in exchange for potentially higher dividend rates.

When compared to a traditional savings account at a bank, the distinction lies in ownership and profit distribution. Credit unions are not-for-profit cooperatives, with members receiving “dividends” from earnings. Banks are for-profit corporations that pay “interest” to customers, with profits distributed to shareholders. This member-centric model often translates to competitive dividend rates and potentially lower fees.