DEFINITION of 'Share Draft'

A type of draft used in credit unions as a way to access funds in individual accounts. Share draft accounts at credit unions are the equivalent of personal checking accounts at banks. Likewise, share drafts are the equivalent of bank checks. Shares represent partial ownership in a credit union, and credit union members (shareholders) write drafts (checks) as a way to access the value of their partial ownership (shares).

BREAKING DOWN 'Share Draft'

A credit union functions differently than a conventional bank; in a credit union, every member is also a partial owner. Because credit unions are cooperatively owned, members do not make deposits, but rather purchase shares. Shares do not earn interest, but instead earn dividends. What's more, share draft accounts usually carry neither monthly fees nor minimum balance requirements, unlike many bank checking accounts.

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