The Credit Union Difference


Credit unions are not-for-profit financial cooperatives, owned by the people who save and borrow there. Every member has the right to vote on policies and for members of the credit union board. The majority of credit union boards are made up of volunteer members.

Unlike most other financial institutions, credit unions do not issue stock or pay dividends to outside stockholders. Instead, earnings are returned to our members in the form of lower loan rates, higher interest on deposits, and lower fees.

By current federal statute, credit unions cannot serve the general public. People qualify for a credit union membership through their employer, organizational affiliations like churches or social groups, or a community-chartered credit union.

Our critics often claim that credit unions “don’t pay taxes.” Credit unions do pay taxes – payroll taxes, sales taxes, and property taxes. Congress exempts credit unions from federal income taxes. The exemption was established in 1937, affirmed by statute in 1951, and re-affirmed in 1998 in H.R. 1151, the Credit Union Membership Access Act, which states: “Credit unions, unlike many other participants in the financial services market, are exempt from Federal and most State taxes because credit unions are member-owned, democratically operated, not-for-profit organizations generally managed by volunteer boards of directors and because they have the specified mission of meeting the credit and savings needs of consumers, especially persons of modest means.”

New federal laws and regulations are changing the structure of the financial services industry. In this time of accelerating change, it is important to truly understand how credit unions are unique and different, and why we remain a necessary and extremely popular financial alternative for 82 million Americans.

Credit unions benefit consumers by assuring that competitive rates and services are offered in the financial marketplace. Loss of tax-exemption would result in pressure on credit unions to move away from the not-for-profit cooperative structure; reducing innovation, service, and consumer choice. Thank you for supporting the credit union movement!