One of the main factors that distinguishes Talka Credit Union from the big banks and many other credit unions is its Interest Rebate Program. Annually, the Board of Directors reviews Talka’s profitability and sets aside enough in retained earnings to meet regulatory capital requirements and provide a buffer for planned growth. In keeping with Talka’s cooperative principles and members’ objectives, the Board approves a distribution of profits via interest rebates to members on December 31st each year.
The examples below are to illustrate how interest rebates are calculated if the Board were to approve a 7% interest rebate on member deposits and 3.5% interest rebate on residential mortgages and personal loans.
- Member A has a $100,000 five-year term deposit at 2.10% and received the annual interest payment $2,100 during the year. At the end of the year, the Board approved an additional interest rebate of 7% or an additional $147 interest rebate which increases the effective yield to 2.247%. If the term deposit was invested in a registered product like a RSSP, RRIF or TFSA the rebate would be added to the contract balance.
- Member B has a $150,000 Home Equity Line of Credit (HELOC) at 3.00% with an average balance of $100,000 and paid Talka $3,500 in interest on this loan. At the end of the year, the Board approved an interest rebate of 3.5% of the interest paid and refunds $122 to Member B reducing the effective interest rate to 3.378%.
Interest rebates are just one of the ways the credit union wants to show its’ appreciation by sharing our profits with our members.