What is a share draft?

A share draft is specifically defined as a check that is written against a credit union account. This term is unique to credit unions, where account holders can withdraw funds by writing share drafts, which are essentially the same as checks used in traditional banking. The funds are drawn from the member's share (or savings) account within the credit union.

This concept highlights the difference in terminology between banks and credit unions. In a credit union, the term "share" signifies that members are shareholders or owners of the institution, and share drafts serve as a mechanism for accessing their own funds. This function mirrors that of a checking account in a standard bank, but the distinct terminology emphasizes the credit union's cooperative structure.

The other options refer to different financial concepts: a credit card transaction involves borrowing money for purchases instead of accessing funds from a personal account; a loan application process relates to the procedure for obtaining credit; and an interest-bearing investment refers to a financial asset that generates interest income, which is not directly related to the mechanics of writing checks or share drafts.