Credit Union
Core concepts
Credit union questions test common bond (membership eligibility), savings/shares, loans, dividends, loan interest rebates, and governance (board of directors, supervisory committee, credit committee). Know volunteer vs professional structures, prudential regulation, and member protection schemes.
Understand loan-to-share ratios, loan terms, security, and member services (death benefit insurance, savings protection). Know the difference between credit union (not-for-profit, member-owned) and bank (shareholder-owned).
Traps
- Assuming anyone can join - a common bond must be met.
- Confusing dividend (return on shares) with interest (cost of loan).
- Forgetting loan interest rebates may be paid to members.
- Mixing supervisory (compliance) with credit (lending) committees.
Rule of thumb
Credit unions are member-owned and not-for-profit: surplus is returned to members via dividends or rebates, not shareholders.
Worked example
A member with €5,000 in shares may borrow a multiple of that (subject to loan-to-share limits and affordability), with interest charged on the loan and a possible rebate at year-end.