What Are Regular Shares?

A credit union is a non-profit, member-owned banking cooperative that operates among a well-defined group whose members share a common bond. This means that the people or members who use the credit union's services own the institution and control it. In fact, credit union members elect a volunteer board of directors to manage the facility.

A credit union provides the services of a community bank, but it does so at a lower cost. This is possible because the profits that a credit union earns are returned to its members in the form of lower fees. These services are provided to share account holders whose partial ownership in the credit union is represented by share accounts of different types, including the regular share savings account.

A share account, regardless of its type, represents the account holder's ownership in the credit union. The share account establishes your credit union membership that, in turn, grants you access to other credit union products and services, including loans and checking accounts. A share draft account, for example, is similar to a checking account in that it accounts for your cash deposits, withdrawals and payments to other entities.

While a share draft account is a credit union's checking account, the regular share savings account is the organization's savings account. Whereas a credit union pays variable dividends on the cash deposited in a share savings account for a certain term, cash deposits to a share checking account, or draft account, are liquid.

A regular share account is a savings account to which a credit union member deposits cash and, as a result, establishes ownership in a credit union. Based on this account, the credit union pays the account's owner dividends that are compounded quarterly.

As a depositor opens a regular share account, she acquires a share of the credit union. The amount of the deposit, or share in the credit union, is added to the depositor's account balance.

The funds you deposit with your credit union account are insured by the FDIC – the Federal Deposit Insurance Company. The FDIC insures your deposits to a maximum of $250,000.

What's more, as a share account owner, you can voice your option on the credit union's management and vote on issues, such as members of the organization's board of directors.

The interest rate that a credit union pays on your regular shares varies by credit union and according to the yield on U.S. Treasury notes, bonds and other financial instruments, as well as the credit union's competitive stance in relation to other financial institutions. To be more competitive and acquire additional deposits, the credit union will increase the interest rate that applies to your savings account and other products, such as certificates of deposit (CD).

A share draft account resembles a checking account whereby the account owner may pay bills online, withdraw cash from an ATM or make a purchase by writing a check. In most cases, you won't earn interest on your deposits to a regular checking account. Some credit unions, however, offer interest or reward checking accounts that pay interest on the cash in the checking accounts; check with the credit union you wish to join first to be sure.