PLCU Online - Internet Home Banking
PLCU Home Page
 Posted:  6/21/2013 20:15

The Credit Union Difference

Not-for-Profit Credit Unions Benefit All Consumers

Credit Unions Should Remain Tax Exempt

The Value of Credit Unions

Credit unions, as not-for-profit financial cooperatives, are fundamentally different from banks in many ways that provide significant benefits to consumers.  Because of these differences, Congress has exempted credit unions from paying federal income taxes. 

The banking industry is challenging the credit union tax exemption.  Consumers need to understand the value of credit unions and the importance of the tax exemption.

How Are Credit Unions Different From Banks?

Credit Unions

  • Owned by their members
  • Focused on serving consumers
  • Not-for-profit cooperatives
  • Must be eligible to join
  • Earnings are returned to members
  • Pay payroll, property, and sales taxes


  • Owned by their stockholders
  • Focused on generating profit
  • For-profit businesses
  • Anyone can be a customer
  • Profits are distributed to stockholders
  • Pay federal income taxes, although many smaller banks are exempt

How Do Consumers Benefit?

Credit unions provide benefits to their members through higher dividend rates, lower interest rates on loans, and reduced fees.  Credit unions also benefit all consumers by providing healthy competition that drives bank rates lower.

Why are Credit Unions Tax Exempt?

Congress decided in 1937 to exempt credit unions from federal income tax because of their unique structure and role in the financial services industry.  The tax exemption was reaffirmed by Congress in 1951 and again in 1998. 

Credit unions provide a valuable alternative to the for-profit banking system, and continue to serve consumers who have no other access to financial services.

Could Credit Unions Lose Their Tax Exemption?

The banking industry is asking legislators to tax credit unions.  They say the tax exemption gives credit unions an unfair advantage and hurts bank profits.  If that were true, why are banks reporting year after year of record profits? Clearly, the credit union tax exemption has not affected bank profits and continues to help credit unions serve consumers well.

Why Should Credit Unions Remain Tax Exempt?

The facts that convinced Congress to originally grant credit unions their tax exemption remain true today.  However, if credit unions lose their tax-exempt status, they will have to pass along their tax payments in higher fees, higher loan rates, and lower savings dividends to consumers, just like banks do.  Ultimately, a tax on credit unions is a tax on consumers!

Educating Consumers About Credit Unions is Important!

It is vital to educate yourself and your family and friends about the credit union difference.  Thank you for taking the time to read about this issue.  Your credit union can provide additional information and assistance with your financial needs.

Go To Online Banking Home :: Contact us :: Locations & hours :: Site index :: Privacy Policy

Terms of Use:   The Point Loma Credit Union website is for the exclusive use of its members and non-members interested in the services of the credit union.  Any unauthorized or unlawful use is strictly prohibited.

Disclaimer:  Point Loma Credit Union is not responsible for the privacy practices or the content of websites which we may provide a link to.  While all efforts are made to maintain the accuracy of information presented on the Point Loma Credit Union website, we cannot guarantee that all information is current.  Please contact the credit union call center directly for the most current information at 858-495-3400.

National Credit Union Association Equal Housing Lender America's Credit Unions

Your savings Federally insured to $250,000
by the NCUA, National Credit Union Administration,
a US government agency.  Point Loma Credit Union
is an Equal Housing Lender.

Copyright © 1998-2015, Point Loma Credit Union
All rights reserved