Why do I have to pay to “join” a Credit Union?

What is “Par Value” and why do I have to “join” a credit union? Joining a credit union involves a small cost (“par value” share account) or initial deposit because credit unions are member-owned cooperatives. This small ($5.00) deposit helps establish your membership and ownership in the credit union, making you a part-owner with a say in how the credit union is run. 

When you join a credit union, it’s a bit like joining a club. To become a member of this club, you need to buy a small piece of it, called a “share.” This share has a set price, known as the “par value.”

Here’s one way to think about it:

• Joining the Club: To join the credit union, you need to fill out an application and buy one share (depositing your share into a savings account you own).

• Buying a Share: The share is like your ticket to be part of the credit union. The price of this share is called the “par value.” Each credit union decides how much this par value is; at Service One it is just $5.

• Staying a Member: As long as you keep your share, you stay a member of the credit union. This share shows that you own a small part of the credit union.

So, when you open an account or get a loan from a credit union, you need to buy this share first. 

What is “par value”?

 “Par Value” refers to the initial “value” assigned to a share of Service One Credit Union or in our Credit Union $5.00. By law, Service One Credit union requires each member (customer) to open at least one Share (savings) Account. The par value in credit unions plays a role in defining membership, allowing members to attend the annual meeting, and ensuring the financial stability of the institution.

In other words, you establish a share account by depositing money equal to one par value to join the Credit Union, because unlike banks, credit unions are owned and operated by their members. When you join a credit union, you buy a share, which makes you a part-owner of the credit union.   All members have “one” share account allowing equity across the Credit Union.  Unlike a bank where you can own multiple shares by purchasing bank stocks.

What are the benefits of being a member?

Unlike banks being a member of Service One provides you with other financial benefits:

• Better Interest Rates: Service One often offer higher interest rates on CDs and MMAs and lower rates on loans compared to traditional banks.

• Lower Fees: Service One generally have lower fees for services such as checking accounts, ATM usage, and overdrafts.

• Personalized Service: Service One is known for their member-focused approach, providing personalized member service and financial credit advice.

• Community Focus: Service One is deeply invested our local communities, awarding scholarship and grants and supporting local projects and charities.

• Member Ownership: As a member, you can attend the Annual Meeting, including voting rights in board elections, and a have voice on issues you think need improvement.  

Why Does Par Value Matter?

Par value is significant for credit unions for several reasons:

• Shows a Commitment:  Your Par value deposit demonstrates your commitment to being a member and participating in Service One’s Purpose and Mission.  It’s a small way to be a member of the Service One family, while you obtain the benefits you need.

• Your Membership Requirement: To become a member of a credit union, individuals need to purchase at least one share at its par value. This establishes their membership and ownership in the credit union.

• Financial Stability: The par value of shares helps maintain a stable financial base that supports the credit union’s operations and absorb costs associated with services where the member is not charged.

• Dividend Calculations: Par value can influence how dividends (interest rates) are calculated, and dividends paid to members’ accounts. 

• Regulatory Compliance: Service One must comply with specific regulations regarding share values and membership requirements. Setting a par value helps ensure we meet these legal obligations.

Still have questions about joining Service One Credit Union?

Reach out to us and share your questions at voiceofthemember@socu.com or call us at 800-796-8500.