Click to see full graphic:

 

 

Source: Daily Infographic

Category: Credit, Data Analysis, Digital Media, Finance

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

11 Responses to “Banks vs Credit Unions”

  1. daveG says:

    This graphic conveniently leaves out the FACT that credit unions DO NOT pay federal corporate income taxes. And they never have since the inception of their charter in 1931. Let’s apply the same federal corporate income tax rate (that banks pay) to ALL credit unions and see how the comparative pricing on assets and liabilities looks like then!

    Credit Unions were given the federal tax exemption in 1931 because credit was hard to obtain…..fast forward 80 plus years…obtaining credit is hardly the issue of the day. Tax them. #fairshare

  2. Jim67545 says:

    Amen daveG. Credit Unions were originally given tax exemption because they were designed to serve some limited group, such as the employees of one employer. This limited market, and limited range of products, was something CUs accepted as their fundamental design and the government gave these quasi-charitable organizations a tax exemption.

    Fast forward to today and you have CUs defining their “common bond” as anyone who lives, works, goes to church or school in any of several counties – in other words no longer a limited market. Also, their size and range of products often rival or exceed the community banks with which they compete. They are no longer essentially different from banks – except for their tax treatment.

    This is a situation where the government, in essence, is choosing the winner. No matter what your employer does, what would you think if one of your competitors is operating tax free while you are paying 34% income tax? What would that do to the competitive relationship? Might the tax free competitor undercut your prices? You betcha.

    What it does in this case is allow CUs to apply a portion of the tax benefit to undercut their tax paying competitors. If you look at the after tax yield on the 48 month car loan you will find that the CUs tax free yield is higher than the bank’s after tax yield is.

    So, what CUs can do is select a market, such as car loans, where they want to use their tax advantage to take over the product. In some markets this has driven banks out of certain types of consumer loans and reduced their ability to service the needs of their customers and has driven those banks into less desireable and often higher risk products. This is not a good thing for our banking system.

    Bashing banks is popular here. However, there are something like 5,000 banks around the country and most are trying to simply serve their customers with good banking services at fair cost. Granting CUs this tax advantage destroys this system – regardless of whether someone can get another 0.10% on a deposit account. Ultimately, we as tax payers are subsidizing this. Subsidizing one business to compete against another is destructive.

    On the issue of zero percent (or below market or 24 months to first payment, etc.) rates on car (furniture, other) loans, unless it is from a captive finance company, such as Honda Credit, which has an ulterior motive (car sales), there is most probably a “fee” paid by the car dealer to the lender which the dealer will try to recover in the price of the merchandise or the price of the trade-in. Caveat emptor.

  3. yuan says:

    “This graphic conveniently leaves out the FACT that credit unions DO NOT pay federal corporate income taxes.”

    Banks are for profit corporations and should be taxed. Credit unions are “non profit” co-ops that are required by law to use proceeds for the benefit of members (typically by reducing loan interest rates or increasing dividends).

  4. Dow says:

    I love my credit union. When Citi bought the bank that held my accounts in the 1990′s – I closed everything and moved to a credit union. Why anyone still uses a for-profit bank is beyond me.

    Credit union ATMs – as long as you stay in the NCUA network, you usually can use another member ATM for free.

  5. abqhudson says:

    We all know that Corporate taxes are just hidden taxes on the Corporation’s customers. Why the rush to raise more taxes to feed an insatiable federal government?

  6. Greg0658 says:

    abqhudson “taxes on the Corporation’s customers” .. why that would be: modern corps are global & to spread the cost for the global police force

  7. Giovanni says:

    I’m not sure that the tax treatment of non-profits is really ‘picking winners’ especially when compared to the stupendous amount of money the government has doled out to banks, directly or by backdoor means.

  8. Jim67545 says:

    Giovanni,
    The vast majority of banks in this country received no government bailout.

  9. DeDude says:

    The only difference between a bank and a credit union is that the bank is trying to predate on poor and middle class people who are in need of a loan for the benefit of their big fat rich owners. If the community bank is so hurt by all those tax advantages their credit union competitors have, then they could just turn themselves into non-profit credit unions. Oh I forgot, then they would also have to eliminate the big fat rich wampire squid owners sucking hard earned dollars out of regular folks – no can do. The financial sector is already sucking way to much money out of the productive economy. Using credit unions is one way of trying to reduce what that sector is steeling in return for providing the very simple product of capital allocation. There is an huge waste in allowing this simple function to swallow 1/3 of all profit in our economy and it has been extremely counter-productive as it basically has feed more and more complicated and inefficient capital allocation schemes. Just like you as an individual can stop feeding our external enemies by reducing your use of oil, you can stop feeding the internal enemies of society by shifting your banking to non-profit credit unions.

  10. ilsm says:

    Credit unions were always good for military folks who moved a lot and could end up where the banks were not around since in remote areas there are too few middle class folks for the “big fat rich wampire squid owners sucking hard earned dollars out of “.

    Also up to Reagan and the “redux” pay raises for the all volunteer force recruiting military members were not worth the atttention of “big fat rich wampire squid owners sucking (GI”S) hard earned dollars” out of.

  11. Brucethebest says:

    Yes, unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income. Eliminating this exemption would raise revenue and level the playing field but would clearly raise taxes on credit unions. In fact, nationally, ending the credit union income tax exemption could bring $19 billion in additional revenues to the U.S. Treasury over the next 10 years, according to one government estimate. In Wisconsin, taxing credit union profits at the same rate as corporations would provide anywhere from $15 million to $40 million in new revenues for the state, according to various reports.