What are Credit Union Shares?
A Credit Union functions differently from a commercial bank. In a credit union, every member is also a part owner. Because credit unions are co-operatively owned, members’ deposits are treated as shares. Shares do not earn interest, but instead, earn dividends.
When a member opens a credit union account, unlike a bank, they are given a minimum of two (2) share accounts. A permanent shares account and an ordinary shares account.
Permanent Shares
Permanent Shares account is the primary account that every member must have. With this, the member becomes a permanent shareholder of his/her credit union and receives dividends paid at the end of the financial year at a rate determined at the Annual General Meeting if a surplus is made. Every member must have at least 1 permanent share as it establishes membership in the credit union.
Ordinary Shares account
Ordinary Shares account is the main account or savings account in the credit union in which the member can make deposits and withdrawals daily. It also helps to qualify members for a loan.
Deferred Shares
Deferred Shares are shares issued at no par value that is held by a member for a period of not less than five (5) years. Deferred Shares form part of the Capital of the Credit Union. This is not compulsory.
