DEFINITION of 'Share-Draft Account'
Share-draft accounts were created under the Consumer Checking Account Equity Act of 1980. They allow credit-union members to access their share balances by writing drafts on their accounts. Share-draft accounts allow for an unlimited number of checks to be written, and one of their primary benefits is that they are secured with federal insurance. Interest earned on share-draft accounts is compounded quarterly.
BREAKING DOWN 'Share-Draft Account'
These accounts are similar to negotiable order of withdrawal (NOW) accounts, which are basically interest-bearing savings accounts against which drafts can be written. However, share-draft accounts are offered by credit unions, whereas NOW accounts are bank products.