What is a Share Account? - M4Money Credit Union

What is a Share Account?
A share account is a basic savings account offered by credit unions to their members. It serves as a primary account where members deposit money, which, in turn, represents their ownership stake in the credit union. The term “share” reflects the concept that credit union members are not customers but co-owners of the financial institution. When you open a share account, you are essentially buying a share in the credit union, making you a member of the cooperative.

Ownership and Member Rights:
By holding a share account, credit union members gain certain ownership rights and privileges. Unlike in traditional banks, where customers are generally disconnected from the institution’s decisions, credit union members have a say in how the credit union operates. Members have the right to vote in board elections, participate in annual meetings, and provide input on important matters, such as policies and services.

Becoming a Member:
Opening a share account is usually the first step to becoming a credit union member. Credit unions have specific eligibility criteria, known as the “field of membership,” which define who can join the institution. Eligibility can be based on factors like geographical location, occupation, membership in a particular organization, or affiliation with a specific group. Once you meet the criteria and become a member by opening a share account, you gain access to a range of financial services offered by the credit union.

Dividends and Earnings:
Rather than earning traditional interest like in a bank savings account, credit union members earn dividends on their share account deposits. Dividends are similar to interest, but the terminology highlights the cooperative nature of credit unions. The dividend rate is set by the credit union’s board and may vary based on market conditions and the credit union’s financial performance. Members receive periodic dividend payments based on the balance in their share accounts.

Safety and Insurance:
Share accounts, like bank savings accounts, are generally protected for up to £85,000 amount by the Financial Services Compensation Scheme (“FSCS”).

In summary, a share account is not just a place to save money; it represents a membership stake in a credit union, entitling you to certain rights and benefits as an owner. By holding a share account, credit union members actively participate in the institution’s decision-making processes and support the cooperative principles that credit unions are built upon.