All You Need to Know About Bonus Dividends and Loan Rebates

One of the best parts about being a member of a credit union is the extra benefits and bonuses you receive that are not typically offered at banks. In addition to low interest rates on loans and high yields on savings accounts, there are advantages that are unique for members of credit unions. Two of these benefits are bonus dividends and loan rebates. Let’s take a look at these credit union features and how they work.

How do these benefits work?

As member-owned cooperatives, credit unions generate revenue through various operations, such as interest on loans, investments, and other financial services. In many credit unions, after covering operating expenses, all or a portion of surplus proceeds are returned to members. This is done through lower interest rates on loans, low or waived account fees, and all the other advantages members enjoy at Scott Credit Union.

But some credit unions take it one step further and actually put money back in their members’ pockets through bonus dividends and loan rebates, each of which are paid off at specific times of year. Scott Credit Union is proud to have consistently returned an annual bonus dividend and a loan interest rebate to its members.

What are bonus dividends?

Share deposit accounts typically earn regular dividends throughout their term. Bonus dividends are extra payments beyond these expected dividends, which are divided among eligible members upon approval from the credit union’s board.

Typically, a credit union will review its performance at the end of the year or the end of a business quarter, then determine whether a bonus dividend can be paid to its members. If approved, the dividends will be distributed among members based on their financial activity with the credit union over the past year. The dividend amount will be calculated as a rate of the member’s shares. Generally, members who have interacted more with the credit union will receive a higher dividend rate. This includes having a significant savings held in shares, having an active checking account, and maybe even strong use of a debit card for purchases.

At Scott Credit Union, bonus dividends are credited to the member’s share account. Other credit unions may offer members the option to choose how they receive their reward.

What are loan rebates?

Loan rebates are another way credit unions give back excess revenue to their members. Credit unions pay back a percentage of the interest the borrower paid over a specific period. In general, the more interest the member paid on the loan, the higher the potential rebate.

Also, in a manner similar to the way bonus dividends are calculated, members with more interactions with the credit union will typically enjoy a higher rebate rate. Typically, members must be up-to-date on their loan payments, and a late loan payment may disqualify you from the rebate.

At Scott Credit Union, we are proud to pay back millions of dollars to our members in bonus dividends and loan rebates. We value our members and are committed to providing them with the best financial services. If you are interested in becoming a member, contact us today! Learn more on our website or by visiting your local branch.