On Saturday, the Grand Forks Credit Union announced that they had a surplus of $1 million and would be paying it back to members.
“As a financial co-operative, we offer banking services like any other bank… but the difference is if we have surplus, we distribute all those surplus earnings back to the members of the credit union,” said Kelly Thomas, CEO of Grand Forks Credit Union.
The $1 million is a patronage dividend. A borrower who is paying four per cent on a mortgage would see the rate effectively reduced to 3.6 per cent, while a depositor receiving 1.9 per cent on a term deposit would see return of 2.09 per cent.
“It will go out to them in cash, but a way of looking at that is, to get a dividend you have to have a loan or deposit.”
Thomas says it’s based on how much business you have.
“We have some members who have millions of dollars of business here and so the cheque for them will be quite large,” he says. “It’ll be thousands of dollars.”
According to the press release, a borrower with a $100,000 mortgage in 2010 paid approximately $4,000 in interest. The 10-per-cent patronage will give them a $400 rebate. Someone who has a $100,000 term deposit, on the other hand, earned around $1,900 interest and would get $190 back.
Thomas says that since financial institutions are competitive, a credit union offers the same competitiveness and services but also with the added incentive that the money going into it will stay in the community.
“We keep enough money back to run the business and then we take the rest of that financial wealth and we disperse it all through the community,” Thomas says.