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Credit Union Difference

When you open an account a credit union, you're considered a 'member', not a customer, and as such, you have a stake in its success. That's what we call the Credit Union difference. It's about people helping people.

There are many other significant differences between belonging to a credit union and opening an account with a bank. Credit unions promote the financial well-being of members, including those of modest means, through a system that is cooperative, member-owned, volunteer-directed and not-for-profit. Unlike banks, credit unions exist solely to serve members, not to pay high dividends to an outside group of stockholders. Credit union income is returned to members in the form of higher dividends and lower rates on loans.

Overview of the differences from banks:

Owned by their members Owned by their stockholders
Focused on serving members Focused on generating profits
Not-for-profit cooperatives For-profit businesses
Must be eligible to join Anyone can be a customer
Earnings are returned to members Profits distributed to stockholders
Pay payroll, property and sales taxes Pay federal income taxes, although many smaller banks are exempt

How Do Consumers Benefit From The Differences?

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.

Information from this page was taken directly from the brochure "The Credit Union Difference - Not-for-Profit Credit Unions Benefit All Consumers" printed by the California Credit Union League. This brochure may also be available at your nearest branch location.

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