SHREWSBURY, N.J. – Share drafts aren't dead just yet.
Despite the Federal Reserve reporting in a 2004 study that the number of checks/share drafts being written is declining by 4% a year, the value of share drafts written in the credit union industry has risen steadily (see chart to right).
With the recent success of the debit card and the longstanding history of credit cards, share drafts are likely to level off and decline going forward. Despite this forecast, it is still vital for credit unions to provide share drafts as a share draft account is considered vital to ensuring a CU becomes a member's primary financial institution. Currently, 70% of credit unions (see chart below) offer share draft accounts.
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Check 21 legislation, which permits exchange of electronic images of share drafts, became effective in October of 2004. Many predict full-blown image exchange, which is contingent on the big banks getting involved, will blossom near the end of 2006. If that happens, it will decrease the costs and increase the speed at which the credit union industry processes share drafts.
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