Paying out a bonus dividend to your membership

An interesting topic was brought up on EverythingCU.com today. And that is the subject of paying out a bonus dividend to a credit union’s membership. It’s a very interesting question with no easy answers. On the one hand, it is a way that credit unions can truly reinforce their difference from banks in a way that is tangible to their members. On the other hand, those dollars could be used to lower loan rates further, increase savings rates further, or provide even more services, convenience or technology to the members.

One thing for sure, if a credit union is going to pay out a bonus dividend to its membership, make ABSOLUTELY sure that the members KNOW it. It’s imperative to tell them WHY they are getting the bonus when you give it to them, not just add a few dollars to their statement (which will only serve to confuse them and their reconciliation.) If there is a calculation used, let them know what the calculation was. That way, they understand if it was only for a couple of bucks, it COULD have been more if they utilized the credit union more. Use the opportunity to tell your CU’s story! It’s the perfect time to do it!

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One Response to “Paying out a bonus dividend to your membership”

  1. Robbie Wright Says:

    If a credit union is in the position to pay out a bonus dividend, by all means do it! CU’s with over a 10% cap ratio are just hording money because it is the safe thing to do. Use it for capital improvements, expansion into new markets, try out some new technology, or payout out some bonus dividends! If CU’s are paying out excessive bonus dividends continuously then they are not managing their cost of funds as well as they could and could afford to lower loan rates or raise deposit rates. And I agree, it is also vitally important to explain the formula the CU would use to distribute the money, whether it is by total combined balance, number of services, how many times you frequent a branch, or how many bills you pay online.

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