October 21, 2013
A credit-union share purchase (it's not a membership fee) is fully refundable, and it DOES earn dividends (treated as interest for tax purposes) at some credit unions. Vancouver City Savings Credit Union has paid me thousands in dividends over 25 years, though their performance has collapsed since the mistakes management made in 2008.
There are at least 3 kinds of shareas at issue.
First is the membership fee or share. Technically, it's a membership share, but is often referred to as a membership fee, even by CU staff. Every member pays this when they join, and the cost varies from $1 to $100. I am not aware of any that charge more than that. It would be impossible to gain "thousands" of dollars in dividends from these. I belong to several CUs in 2 provinces and have never earned interest on these shares from any of them, nor do I expect to. This fee or share is returned when your membership ends.
Then there are patronage dividends, which go by various names such as Class A Bonus Shares. These are based on how much business you do with the CU and are taxable. They are not predictable and are normally awarded in the first quarter of the year based on the previous year's profitability. Borrowers and savers do not necessarily get the same reward. Some CUs hold them as this type of share and don't let you have access to them for some time. Others give it to you right away in cash rather than shares, to do with as you wish. If they are retained by the CU, you may receive interest on the dividends.
Thirdly, there are what are usually called Investment Shares. These are optional for you to buy. They normally pay a fixed rate of interest for a fixed term. They are similar to GICs but are not covered by insurance.
Not all CUs offer patronage dividends. I don't think they all offer investment shares either but not sure.