Share Draft Accounts: Daft or Differentiated?

“If it walks like a duck
and squawks like a duck…
…it’s a duck.”
— Ron Shevlin,
Senior Analyst
Aite Group

What should credit unions call checking accounts? It’s not a trick question. Hundreds of U.S. credit unions still use the technically accurate term “share draft” to refer to their checking accounts. But most experts in the credit union industry agree that this is a big mistake. They warn that consumers who already struggle to understand the basic concept of credit unions are likely to be confused and frustrated by such an obscure term.

Chuck Bruen, CEO First Entertainment Credit Union says the term “share draft” is as awful as it is unnecessary. “To me it is like fingers on a chalk board.”

Bruen, a self-professed credit union old-timer who says he knows all about the history of “share draft,” wonders why a credit union would ever try marketing something called a “share draft account.”

“First, whenever you use it you have to explain what it is,” Bruen explains. “And second, it sounds like something less negotiable than a check.”

“Credit union marketing folks only have a sliver of time to sell to members,” Bruen points out. “They should not waste that moment on misguided philosophical or legal positions.”

Bruen isn’t alone. Plenty of his credit union peers share his disdain for “share drafts.”

“They come looking for CHECKING. They want online BANKING, too. We have to speak their language,” says Joe Mecca, Marketing Communications Manager at Coastal Federal Credit Union.

“Consumers identify with ‘checking,’ so that’s what we use,” explains Eric Acree, EVP/Vantage Credit Union.

Reality Check: Ron Shevlin, a senior analyst with Aite sums up the sentiment shared by most financial marketers. “If it walks like a duck and squawks like a duck, it’s a duck.”

“’Share draft’ differentiates credit unions in the same way a three-legged chair does from four-legged one — confusing and noticeably awkward,” says John Waupsh, CEO, FIRST ROI.

Mark Arnold, a consultant and author in the financial industry, agrees. “If consumers don’t know what ‘share draft’ means, it can’t be a differentiator.”

“Find ways to be different other than with old terms,” Arnold advises.

“This is where the marketing needs to step up and put another confusing industry term in the historical time capsule,” recommends Randy Schultz, VP Marketing for Weber Marketing Group.

For Discussion: Malinda Wood, Vice President of Marketing, UT Federal Credit Union in Knoxville, doesn’t use the term “share draft” at her organization, but sees “value in reinforcing ‘shares’ as ownership.”

  • How else can credit unions communicate the concept of “ownership?”
  • What real value or benefit is there to being a member with a “share?”

Further Reading: This fascinating article from 1977 reflects a time when it was illegal to pay interest on checking accounts. Credit unions were drawing bankers ire as they started offering “share drafts” despite never receiving authorization from Congress.

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