A share draft is a form of payment that allows credit union members to withdraw money from their account and transfer it to another person. It functions as a written instruction to the credit union, directing them to pay a specified amount to a third party. This concept is similar to a bank draft, which is a check issued by one financial institution to another. Drafts can vary in types, such as time drafts with predetermined payment dates or sight drafts that can be paid immediately upon request. Additionally, the term “draft” can also refer to the mandatory recruitment of individuals into military service.
A share draft is a form of check that allows credit union members to withdraw funds from their share account and make payments to third parties. It functions similarly to a check used to withdraw funds from a bank’s checking account. For instance, if a credit union member needs to pay rent, they can write a share draft for the amount owed and give it to their landlord. The landlord can then deposit the share draft into their own bank account to receive the payment. Share drafts offer credit union members a convenient way to access their funds and make payments without the need for cash or a debit card. They also provide a secure payment method as they require the member’s signature and can only be used if there are sufficient funds in the share account.
A share draft is a type of checking account offered by credit unions. It functions similarly to a traditional checking account, allowing you to write checks, make electronic payments, and withdraw funds.
The main difference is that share drafts are typically offered by credit unions, while regular checking accounts are offered by banks. Credit unions are member-owned financial institutions, while banks are for-profit entities. Additionally, share drafts may have different fee structures and may offer different benefits compared to regular checking accounts.
Yes, you can use your share draft account for everyday transactions such as paying bills, making purchases, and withdrawing cash. It functions just like a regular checking account.
The number of checks you can write from your share draft account may vary depending on the specific terms and conditions set by your credit union. Some credit unions may impose limits on the number of checks you can write per month or per statement cycle.
Yes, you can deposit funds into your share draft account. You can do this by depositing cash or checks at your credit union’s branch, using an ATM, or through electronic transfers.
Like any other financial account, there may be fees associated with a share draft account. These fees can vary depending on the credit union and the specific account terms. Common fees may include monthly maintenance fees, overdraft fees, and fees for using out-of-network ATMs.
Share draft accounts typically do not earn interest. They are primarily designed for everyday transactional purposes. If you are looking to earn interest on your funds, you may want to consider other types of accounts such as savings accounts or certificates of deposit.
Yes, you can often link your share draft account to other accounts within the same credit union. This can allow for easy transfers between accounts and may provide additional benefits such as overdraft protection.
If you write a check from your share draft account that bounces, meaning there are insufficient funds to cover the payment, you may be charged an overdraft fee by your credit union. Additionally, the recipient of the check may charge you a fee, and your credit score may be negatively affected.
Yes, you can order checks for your share draft account. Your credit union will provide you with instructions on how to order checks, and there may be a fee associated with this service.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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