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Capital Credits

Because the telecommunications industry requires lots of capital, and because PERRY-SPENCER RURAL TELEPHONE COOPERATIVE (d.b.a., PSC) is a non-profit organization that returns its profits to its members, we look for every possible avenue to keep the costs of new equipment, services, and other investments as low as possible.

By using what are called “Capital Credits” to finance new products and services, PSC is able to avoid finance charges and other costs that ultimately affect the member’s cost. Capital Credits are essentially the profits that will be paid to our members once the Board of Directors has determined that it is economically feasible to do so.

ONCE A YEAR, an allocation statement containing important information regarding your capital credits is mailed to you. If you had service with PSC in the previous year, this statement will contain the amount being allocated to your capital credits account. This amount is not cash sitting in an account; it is simply a statement of your equity in PSC during the previous year. Capital credits are disbursed/retired to members at the Board’s discretion and as the financial condition of the cooperative allows.

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Capital Credits Process

It begins when a member purchases service from PSC.

Each year, after expenses are paid, PSC calculates margins.

These margins are used to pay down debt, invest in network and improvement projects and allocate to members as capital credits based on patronage.

If financial conditions allow, PSC retires capital credits to members.

Frequently Asked Questions
WHAT ARE CAPITAL CREDITS?

Each month when you pay your bill, you are paying into a member-owned cooperative. Being a nonprofit company, we give back our profits to the members. Capital credit returns are based on the profit for the year and using the percentage you paid into the cooperative, in order to calculate each member’s share.

WHAT IS THE DIFFERENCE BETWEEN CAPITAL CREDIT ALLOCATION AND RETIREMENT/DISBURSEMENT?

When income exceeds expenses in any given year, margins are allocated to each member’s capital credit account according to their usage; this is called capital credit allocation. Capital credits are periodically retired/returned to members when the Board determines that it will not jeopardize the financial condition of the cooperative to do so.

I JUST STARTED SERVICE. HOW LONG BEFORE I GET A CHECK?

PSC has retired capital credits through the year 1997. When considering a retirement, the Board analyzes the financial health of the Cooperative and makes a decision accordingly. We are not able to give an exact timeframe.

CAN CAPITAL CREDITS BE APPLIED TOWARD MY PSC BILL?

Banking policies prevent us from accepting endorsed capital credit checks as a form of payment on your account.

CAN MEMBERS CASH THEIR CAPITAL CREDIT CHECKS AT PSC?

No. You may cash these at a financial institution.

WHY ARE CAPITAL CREDITS NOT PAID OUT ON THE CURRENT YEAR?

Capital credits are paid based off the total amount allocated within the year being paid out vs the dollar amount the Board of Directors approves to retire (be paid out.) The amount is based off looking at the fiscal standing of the Cooperative and keeping in line with industry standards.

WHY ARE YOU PAYING OUT CAPITAL CREDITS FOR FAR BACK (WE ARE ON THE YEAR 1997)?

Annually the Board of Directors evaluates the financial position of the Cooperative and determines whether to pay back capital credits. Then the board determines what years, if any, will receive a capital credit refund that year.

WHY DON’T THEY PAY US OUT FULL YEAR CAPITAL CREDIT?

Capital credits are paid based off the total amount allocated within the year being paid out vs the dollar amount the Board of Directors approves to be paid out. The amount is based off looking at the fiscal standing of the Cooperative and keeping in line with industry standards.

HOW ARE CAPITAL CREDITS FIGURED (EXPLAINED IN PLAIN ENGLISH)?

Capital credits are based off a dollar amount the Board of Directors allocates each year based off the fiscal standing of the Cooperative. This dollar amount is then spread across the members who had services in the year being allocated and is based off the services the member subscribed to within that year: calling features, long distance, Internet, streaming, etc.

WHY ARE THE CAPITAL CREDIT CHECK AMOUNTS DIFFERENT EACH YEAR?

Your allocation/check is based off the services you subscribed to during the year being allocated/paid, and the amount the Board of Directors decides to retire (be paid out.)

WHY DID I USE TO GET MORE MONEY THAN I DO NOW?

Your allocation/check is based off the services you subscribed to during the year being allocated/paid.

I RECEIVED A CHECK IN THE MAIL, BUT IT’S IN THE NAME OF A FORMER RESIDENT. WHAT SHOULD I DO?

We send checks to the last known address of former co-op members. Do not open the check; please mark “Return to Sender” on the envelope and put it back in the mail.

IF THE CHECK IS IN MY SPOUSE’S NAME AND HE/SHE IS DECEASED, CAN I SIGN IT?

No; you should return the check to PSC. Please request an estate packet to complete at which time we will close the account and reissue you a check.

IF THERE ARE TWO NAMES ON MY CHECK, DO BOTH PEOPLE HAVE TO ENDORSE THE CHECK?

Yes; your bank will most likely require both signatures.

I NORMALLY RECEIVE A CAPITAL CREDIT CHECK BUT HAVE NOT RECEIVED IT YET. WHAT DO I NEED TO DO?

Capital credits are paid out in arrears. While it is possible that we have not paid out profits for a year, it’s far more likely that payments just have not been distributed yet.

  • If a check was mailed and we receive the check back in our office with a forwarding address, we will mail it to the forwarding address.
  • If it comes back marked undeliverable, you will need to complete the unclaimed capital credit process.
  • If the check is not received back in our office, we can put a stop payment fee on the check and re-issue a check minus the fee for the stop payment. If you do not want us to put a stop payment on the check, you can wait until the check expires which will be 6 months from the issue date. At that time, the process for unclaimed capital credits would need to be completed.
  • If a check was not mailed because your address was marked undeliverable, please complete the process for unclaimed capital credits.

As always if you need some help, just call us at 1-800-511-4899.

DO I HAVE TO CLAIM CAPITAL CREDITS AS INCOME ON MY TAX RETURNS?

Check with your tax advisor as they are the experts.

HOW LONG DO MEMBERS HAVE TO CASH THEIR CHECKS?

Checks may be cashed within 120 days.

HOW CAN I BE SURE TO GET CAPITAL CREDIT STATEMENTS OR RETIREMENTS IF I MOVE OUT OF PSC SERVICE AREA?

Keep your address current with us, so we can forward payments to you when capital credits are retired in the future. Please call us at 1-800-511-4899 to update your information.