Credit unions - Credit unions are member-owned, non-profit financial cooperatives that offer a range of financial services to their members; credit unions raise capital through member deposits.
Banks - Banks are for-profit, board and stockholder controlled financial corporations that offer a wide variety of financial, investment, insurance, and real estate services to their customers; Banks have the ability to raise capital selling stock.
Credit Union Members - Credit unions are economic democracies - each credit union member has equal ownership and one vote, regardless of how much money a member has on deposit. Credit unions are governed by a board of directors, elected by and from the credit unionís membership, who serve voluntarily without pay.
Bank Stockholders - At a bank, stockholders hold influence in relation to the number of shares they hold, with large stockholders entitled to a greater number of votes. Bank boards are generally compensated for their services.
Earnings of a Credit Union - The earnings of a credit union, minus operating expenses, are returned to the members in the form of higher interest rates on deposits and lower loan rates.
Earnings of a Bank - The earnings of a bank, minus operating expenses, are divided among the stockholders of the bank.
Credit unions - Credit unions do not pay corporate income tax on the earnings of the credit union, but do pay all other relevant taxes, such as payroll and property taxes. Congress and the Louisiana Legislature granted credit unions a tax exemption based on their unique structure as non-profit cooperatives and to provide financial services to those of modest means.
Banks - Banks do pay corporate income taxes on earnings, although there are many banks that also qualify for tax-exempt status under Subchapter S of the IRS Code. Currently 1,800 banks in the U.S., or 19% of all banks, now have Subchapter S status for avoiding taxes on corporate earnings. Banks do not have a tax exemption because they are a for-profit business, intended to provide profits to their stockholders.
Benefits of Joining a Credit Union
Competitive Rates - Because credit unions are owned by their members, they return their earnings to you through reduced interest rates on loans, higher rates for on savings and fewer fees than other financial institutions.
Service - Credit unions are committed to superior service. Since all earnings are returned to the membership, the credit union can concentrate on finding the services that best suit your needs. At a credit union, the members are the only stockholders, which makes them a smart choice for anyone choosing a financial institution. At a credit union, you are not just a customer. Youíre a member.
Security - Just like other financial institutions and banks, your deposits at a credit union are federally insured up to $250,000 by the National Credit Union Administration (NCUA). Individual Retirement Accounts or IRAs are separately insured to $250,000 each.
Broad Range of Financial Services - Credit unions can provide great rates on checking, savings and CDs, and low interest on credit cards, auto and home loans. You can also enjoy a statewide ATM network and online banking through your credit union.
Ownership - As a credit union member, you are an owner of your credit union.