======Share Draft Account======
A Share Draft Account is the [[credit union]]'s clever answer to the traditional [[bank]] checking account. Think of it as a checking account with an ownership twist. When you open a share draft account, you're not just a customer; you become a member-owner of the not-for-profit credit union. The money you deposit is technically considered your "share" of ownership in the institution. The "drafts" you write are the credit union's version of [[checks]], allowing you to access and spend your funds just as you would with any other checking account. Functionally, it comes with a debit card, online access, and all the modern conveniences you'd expect. The key difference lies in the philosophy: instead of generating profits for outside stockholders, credit unions return their earnings to members through better rates and lower fees, making share draft accounts a compelling option for savvy savers.
===== So, Am I Buying Stock? =====
Not in the way you think of [[stocks]] on the [[New York Stock Exchange]]. While your deposits are called "shares," their value is stable. A dollar deposited is a dollar in your account, period. It doesn't fluctuate with the credit union's performance like a stock would. The term "share" is really a nod to the cooperative ownership structure. Every member owns a piece of the pie, so every deposit is a share in the collective. When you write a share draft or swipe your debit card, you are simply "redeeming" a portion of your shares for cash or a payment. It's a cash management tool, not a speculative investment. The real prize of this ownership model isn't capital appreciation, but the superior terms you get as a member-owner.
===== Share Drafts vs. Checking Accounts: The Showdown =====
==== The Players: Cooperatives vs. Corporations ====
The fundamental difference is in their DNA. A share draft account lives at a credit union, while a checking account lives at a bank.
  * **Credit Unions:** These are not-for-profit financial cooperatives. They are owned and controlled by their members—the people who bank there. Their mission is to serve their members, not to maximize profits for external shareholders.
  * **Banks:** These are for-profit corporations. They are owned by investors (stockholders) and are legally obligated to maximize shareholder wealth. Customers use their services but do not have an ownership stake.
==== The Benjamins: Fees and Dividends ====
This is where the ownership model really pays off for members. Since credit unions return profits to their members, share draft accounts often feature:
  * **Lower Fees:** Say goodbye to many of the pesky monthly maintenance fees, minimum balance requirements, and overdraft charges that are common at big banks.
  * **Higher Yields:** Instead of earning [[interest]], share draft accounts typically pay [[dividends]]. Functionally, it's the same—money earned on your balance. However, because credit unions don't have to pay outside stockholders, these dividends are often higher than the interest rates on comparable bank checking accounts.
==== Safety First: Is My Money Insured? ====
Absolutely. This is a non-negotiable for any cash account. Your money in a federally insured credit union is just as safe as it is in a bank.
  * **Bank deposits** are insured by the [[Federal Deposit Insurance Corporation]] ([[FDIC]]).
  * **Credit union deposits** are insured by the [[National Credit Union Administration]] ([[NCUA]]), another U.S. government agency. The NCUA provides the same level of protection: up to $250,000 per individual depositor, per insured institution, in the event the credit union fails. So, you can sleep soundly at night.
===== The Capipedia Takeaway =====
For a [[value investing]] enthusiast, every dollar counts. While a share draft account isn't an "investment" that will make you rich overnight, it's a cornerstone of smart cash management. Minimizing fees and maximizing the return on your cash—even by a fraction of a percent—is a value investor's bread and butter. It's about efficiency. Why pay a bank a monthly fee for holding your cash when a credit union will hold it for free and maybe even pay you a slightly higher dividend for the privilege? That money saved on fees is capital you can deploy into your actual investments. Think of a share draft account as the perfect home base for your portfolio's cash: safe, efficient, and working just a little bit harder for you, its owner.