A Tax on Credit Unions is a Tax on Me: Why Credit Unions Matter and How You Can Take Action

Credit Unions vs. Banks: What’s the Difference?

At first glance, credit unions and banks might seem similar. Both offer savings accounts, loans, and other financial products. However, the key difference lies in their structure and their purpose.

• Ownership: Credit unions are member-owned, meaning every account holder is a part-owner of the institution. In contrast, banks are for-profit institutions owned by shareholders.
• Purpose: The primary goal of a credit union is to serve its members, not to make profits for shareholders. Any earnings are returned to members in the form of lower fees, better dividend rates, and enhanced services. On the other hand, banks exist to generate profits for their shareholders, often at the expense of customers with high fees and interest rates.
• Type of Organization: Credit unions operate as not-for-profits, which is a major reason why they can offer these member-friendly benefits. Banks, as for-profit entities, must generate a return for their investors, which often means charging higher fees and offering lower rates for deposits and higher for loans.

Why Credit Unions Are Needed

Credit unions provide essential services that many people rely on, especially those who might not have access to traditional banking. Here are a few reasons why credit unions are so important:

• Better Rates and Lower Fees: Since credit unions are not-for-profit, they can offer higher dividend rates on savings and lower interest rates on loans. They also tend to charge fewer and lower fees compared to banks.
• Community Focus: Credit unions are deeply embedded in the communities they serve. Profits are reinvested back into the community and the members, rather than being sent to distant shareholders. They support local businesses, help members build financial security, and contribute to the economic well-being of the areas they serve.
• Access to Financial Products: Credit unions often provide more affordable financial products to underserved populations, making banking services accessible to everyone. Whether it’s offering small loans, low-cost checking accounts, or helping people with credit challenges, credit unions play a vital role in financial inclusion.

What’s at Stake? The Potential Tax on Credit Unions

A proposal to tax credit unions would reverse everything that makes them special. Taxing credit unions would force them to raise fees, lower dividend rates on savings, and increase loan rates, making it harder for members to access affordable financial services.

This proposed tax would not affect just credit unions but also their members—people like you—who rely on them for affordable banking. By taxing credit unions, lawmakers would be placing a financial burden on the very people who benefit most from credit unions’ nonprofit status.

How You Can Take Action

It’s time for credit union members to stand up and protect the benefits they rely on. Here’s how you can take action:

1. Stay Informed: Keep yourself updated on the latest news about the proposed tax on credit unions. By understanding what’s at stake, you can make informed decisions and stay involved in the conversation.
2. Contact Your Legislators: Reach out to your local representatives and let them know that a tax on credit unions is a tax on you. Share your personal story about how your credit union helps you save money, get better rates, and offers the services you need. Your voice matters.
3. Spread the Word: Share the importance of credit unions with your friends, family, and social networks. The more people who understand the value of credit unions, the stronger the community voice will be in opposing harmful taxes.
4. Support Your Credit Union: Continue to be an active member of your credit union. The stronger and more engaged the membership base, the better credit unions can stand up for themselves in the face of legislative threats.

Credit Unions Are Worth Protecting

A tax on credit unions is not just a tax on the institution—it’s a tax on you. It threatens the benefits that make credit unions an affordable, community-focused alternative to for-profit banks. Credit unions provide better rates, lower fees, and a commitment to helping their members succeed.

Your involvement can make a difference. Take action today to protect credit unions and continue to enjoy the financial benefits they provide. At Patriot Federal Credit Union, we are here to serve you, and together, we can make sure that the credit union difference remains strong for years to come.