What Is A Share Savings Account?

A share account is a savings or checking account at a credit union. Share savings accounts offer variable dividends, which are comparable to the interest earned on a bank account.  Learn more about a share savings account by reading the article.

What Is A Share Savings Account

You can buy and sell shares and mutual funds tax-free with a share savings account. As long as the value is kept in the account, gains are not taxed and deductions are not given. The cost price (invested amount) is always refundable and is not subject to tax.

The excess less the deductible risk-free return is taxed if you make withdrawals that are higher than the cost price.

For taxable withdrawals made in 2019, 2020, and 2021, the effective tax rate is 31.68 percent. For taxable withdrawals made in 2022, the effective tax rate is 35,2 percent.

This means that dividends from shares and mutual funds deposited in your share savings account are not continuously taxed upon pay-out (applies from and including 2019), but rather that they are deposited to your share savings account and are only taxed when withdrawn from this account.

Only after the share savings account has been closed (i.e., deleted) are losses deductible.

You are permitted to open as many share savings accounts as you like, either with the same provider or with different providers.

Banks, securities firms, and fund management companies can all offer share savings accounts.

What Kind Of Securities Can You Have On A Share Savings Account

Listed shares from EEA-based companies and units from EEA-based mutual funds are both eligible for investment through this account. A securities fund that has a share component greater than 80% at the start of the income year is referred to as a mutual fund.

A share savings account can contain cash, but no interest will be earned.

What Kind Of Securities Can You Not Have On A Share Savings Account

Your share savings account does not allow you to purchase money market funds. Several of the companies listed on the Oslo Stock Exchange are not domiciled in the EEA and do not meet the requirements, so please be aware of that.

How Share Accounts Work

Every account holder in a credit union is a shareholder, which sets them apart from banks. You can vote on various issues and participate in the election of the board of directors as a credit union owner, giving you a voice in management decisions.

Generally speaking, it makes no difference how much money you have in your account compared to anyone else; each member is treated equally and is given one vote.

The foundation of a share savings account is already known to you if you are familiar with bank savings accounts. Even though you open your account through a credit union, the terminology and methods of use are the same.

Your money is just as secure in a federally insured credit union as it is in a bank account that is FDIC-insured.

Deposits are insured for up to $250,000 per depositor, per institution. However, not all credit unions are federally insured, so be sure to ask.1

Don’t confuse a share account with a shared account (that you share with somebody else). Your ownership stake in the credit union is referred to as your “share” when the word is used. Despite the possibility of a joint share savings account, share accounts can also be personal accounts.

Share Savings Accounts

The dividends based on your share are the typical way credit unions pay interest on deposits made in a share savings account. The interest rate you earn could be high or low depending on general interest rates and how fiercely the credit union wants to compete for new deposits.

Ask the credit union if they have money market accounts or certificates of deposit (CDs) that pay higher interest rates if you want to make more money and are willing to put up with some limitations.

Debit cards are typically not available with share savings accounts. You can transfer enough funds into your checking account so that you can use that account to pay bills and other essential expenses.

Share Draft Accounts

There are usually no restrictions on how frequently you can use a share draft account. (An exception might be a company that conducts numerous transactions each month.) You should put your daily spending money in this account.

A share draft account or a checking account is a great option if you write checks, use debit cards to make purchases, use ATMs to withdraw cash, or pay bills online.

The money in your share savings (or checking) account is kept in a secure location. It stays at the credit union rather than being kept at home or carried around.

Make sure your deposits are fully insured and that you aren’t going over the $250,000 limit.

The majority of checking accounts don’t offer interest. On the other hand, some credit unions provide reward checking and interest checking accounts, which let you earn interest.

Other Types Of Share Accounts

When you begin using a credit union, become familiar with a few more terms:

• Certificates of Deposit (CDs)

If you want to increase your earnings, search for “share certificates.” For these, money must be kept in a deposit account for a set amount of time.

• Retirement Accounts

Retirement accounts frequently refer to stocks as well, but common abbreviations like “IRA” should make it easier for you to identify the type of account you have.