Difference between dividend and interest
A representative at my federal credit union used dividend and interest exchangeably in our communication, claiming the two were the same concept in their financial institution, which doesn't sell stocks. I was wondering if what she said is really true?
What differences and relations are between dividend and interest?
Thanks and regards!
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Credit Unions are structured such that the account holders are in fact the owners of the institution. Thus, the money invested in your savings account is in fact a share of ownership, and the interest paid to you is dividend.
Tax-wise, these dividends are usually treated as interest income.
To put it simply interest is the fee you get for loaning money to the bank / government / company / person or whomever you lend it to.
A dividend is the money that a company pays out to its owners.
For some cooperatives (may or may not apply to your credit union) you become an owner through using it, such that they'll pay you a dividend instead of or as well as interest. Which could explain them using the term interchangeably .
One big difference: Interest is contracted. They can change the rate in the future but for any given time period you know what you're going to get.
Dividends are based on how the company did, there is no agreed-upon amount.
Dividend is a payment which is paid by the company after getting profit or interest is plus paid amount which we get on our income.we can pick up the dividend as a form of interest on our investment
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