What is a draft stock account? – Councilor Forbes

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If you are considering becoming a member of a credit union, you may notice that credit unions use slightly different terminology than banks.

A checking account tends to be your primary trading account for a bank’s day-to-day banking needs, but credit unions call this type of account a “stock trading account”. The reason for this name change? As a member of a credit union, you are also a shareholder and co-owner of the organization that holds your account. So when you sign up for a checking account at a credit union, they use the project sharing account name to reflect both your ownership and the fact that it is a transactional account.

There are several reasons why credit unions use different names for similar products and services. A stock checking account is similar to a typical bank checking account, but there are a few key differences related to the main reasons credit unions have a slightly different mission and focus than banks.

Why is this called a draft stock account?

When you have an account with a credit union, the money you put into the credit union secures what are called stocks. Different types of credit union accounts can have the word “stocks” in their name, such as stock certificates instead of CDs, or a stock savings account instead of a bank savings account.

“Share draft account” is more than a name. It is a different way of delivering financial services. Credit unions are non-profit cooperative organizations. Because of this mission and structure, they return their profits to members of the organization, helping to provide members with higher returns on savings accounts, lower interest rates on loans and other benefits for members.

By naming their master transactional accounts as holding accounts, credit unions are reminding their members of the organization’s mission: to literally “share” the profits with members, in a way that helps reduce costs and provide money. best services.

Share provisional accounts or current accounts

Credit union interim stock accounts work in the same basic way as bank checking accounts. You can use these accounts to write checks, make debit card purchases, and make other payments and transactions through your account to manage your day-to-day spending. Some credit unions may designate their draft stock accounts as checking accounts. In fact, some credit union holding accounts rank among the best checking accounts available.

One difference between a checking account and a bank checking account is that credit union checking checking accounts usually pay interest (called dividends rather than credit union interest), unlike most bank checking accounts. Credit unions refer to the interest or return they pay on member accounts as dividends, rather than interest, to reflect the role of credit union membership. In the same way that owners of company shares might receive a dividend, members of credit unions receive dividends in their savings or chequing accounts. Although the name is slightly different (dividend for interest), the idea is the same: to receive income on your money.

The stock trading accounts of some credit unions pay higher or lower dividends, depending on the organization and the annual percentage return, or APY, paid by banks and credit unions. Some banks also offer paid checking accounts. Forbes Advisor’s list of the best high yield checking accounts includes both banks and credit unions.

Is an FDIC equity trading account insured?

Bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC), an independent agency created by the United States Congress to insure deposit accounts and provide specific banking stability support, among others. FDIC member banks are proud to show it off, with the FDIC logo featured prominently on their websites and marketing materials.

Credit unions are not FDIC insured. Credit unions fall under the jurisdiction of the National Credit Union Administration (NCUA), which provides insurance and advice similar to FDIC, but for credit unions rather than banks.

The NCUA insures the accounts of credit unions, much like the FDIC protects bank customers, through the National Credit Union Share Insurance Fund (NCUSIF). If you are a member of a federal credit union or many state chartered credit unions, the money in your stock trading account and other deposit accounts is protected by full faith and credit. the federal government, up to $ 250,000 per owner share, per insured credit union, for each category of account holder. Even if your credit union goes bankrupt, your deposits are protected and you will get your money back insured.

Just as “share current account” is a slightly different name for a current account, the NCUA protects depositors in the same way as the FDIC: different names, same purpose.

How to choose a draft sharing account

If you are looking for a new bank or credit union, there are a few things to consider when deciding to join a credit union and open a new stock trading account:

  • Main purposes and reasons for using the account. If you need a home for your daily expenses, a place to receive your paycheck by direct deposit, and easy access to your money by debit card or ATM withdrawals, a shared drafting account may be the right choice. Much like a bank account, your credit union stock trading account can serve as a home base for your money. If you have a larger amount of money that you want to keep in your savings and potentially earn dividends, you may want to consider opening a savings account, certificate of deposit (CD), money market account, or other potentially more dividend-paying account.
  • Easy access to cash. A typical credit union stock trading account will give you a debit card to use with your account, so you can make purchases and withdraw money from ATMs. The functionality and daily use of a shared checking account is similar to that of a traditional bank checking account. However, before deciding on a credit union stock trading account, you may want to make sure you have access to a convenient network of ATMs. Many credit unions can connect you to a larger network of free or low-cost ATMs across the country.
  • Mobile application functionality and online banking. Digital banking is becoming a staple for financial institutions as customers seek a greater variety of mobile banking application functionality. Before signing up for a stock trading account, you may want to check out the credit union’s mobile app and online banking capabilities. Some credit unions have more sophisticated applications than others. Search the App Store and Google Play for Credit Union to see how well rated their apps are and to get a feel for which credit unions have the right level of mobile technology to meet your needs.
  • Integrations with third-party personal finance apps. If you use personal finance apps or budgeting apps to track your spending and manage your money, you might want to make sure that the credit union draft account can connect and integrate with those apps.
  • Dividend-producing account. Some of the best high yielding equity accounts in credit unions pay up to 2.09% to 4.09% APY. Earning dividends on your stock trading account may not be a good enough reason to join a credit union, but it could be a nice bonus that will allow you to put a few extra dollars in your pocket.

When deciding to join a credit union or open a bank account, be sure to read the fine print and look at the range of services and benefits that a bank or credit union can offer you.

Final result

One of the day-to-day financial services that credit unions provide to their members are credit union interim accounts. In terms of functionality and purpose, these accounts often resemble bank checking accounts. But, in terms of the perks and perks they offer, Interim Accounts reflect the larger philosophy of credit unions: to share the profits with their members, to offer members the lowest costs and best returns possible, and show members every day that they really have credit. union.

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About Ernest Decker

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