re: Credit unions, are they worth it?

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I mean if a tax is money meant to go back to the community, that's the same idea...profits are returned to the members.

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You are totally missing the point. How the money is used is irrelevant.

Credit Unions are subsidized by taxpayers giving them a competitive advantage over stockholder owned banks. That's why credit unions can pay higher interest on deposits and charge lower interest on loans.

It used to be that credit unions needed a "common bond" such as all the members had to work for the same employer. As such, they were considered a cooperative and therefore their profits were not taxed. They also were only allowed to make consumer loans...autos, home improvement, vacation loans..that sort of thing.

Then laws changed which allow credit unions to make commercial loans just like banks. Also the "common bond" requirement disappeared. Now a common bond might be the customers must live in within the state, or speak English, or must have two eyes.

Those credit unions are no longer cooperatives. They are commercial banks but don't have to pay corporate income taxes, which isn't equitable.

Everything you say is true. But it's interesting that you put it like this:

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Credit Unions are subsidized by taxpayers

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Not that you are wrong or trying to deceive anyone, but it makes me think of different ways it can be said:

... given tax credits
... return profits directly to members instead of sharing with the government

Also,

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That's why credit unions can pay higher interest on deposits and charge lower interest on loans.

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I don't think you can pin it down to just the taxes CUs don't have to pay. Even after taxes, a stockholder owned bank could have better interest rates on both ends if it put its profits back in members hands instead of shareholders. I understand that isn't the purpose of a publicly traded company; but let's not pretend that big banks are trying to have competitive rates with CUs. They compete with other large banks for shareholders and customers so they have to balance between profit/growth and customer retention/gains usually in the form of limited-time offers.

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I don't think you can pin it down to just the taxes CUs don't have to pay.

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Yes, you can.

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a stockholder owned bank could have better interest rates on both ends if it put its profits back in members hands instead of shareholders

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This makes no sense from an economic point of view. I stopped reading there.

quote:

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You are totally missing the point. How the money is used is irrelevant.

Credit Unions are subsidized by taxpayers giving them a competitive advantage over stockholder owned banks. That's why credit unions can pay higher interest on deposits and charge lower interest on loans.

It used to be that credit unions needed a "common bond" such as all the members had to work for the same employer. As such, they were considered a cooperative and therefore their profits were not taxed. They also were only allowed to make consumer loans...autos, home improvement, vacation loans..that sort of thing.

Then laws changed which allow credit unions to make commercial loans just like banks. Also the "common bond" requirement disappeared. Now a common bond might be the customers must live in within the state, or speak English, or must have two eyes.

Those credit unions are no longer cooperatives. They are commercial banks but don't have to pay corporate income taxes, which isn't equitable.

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good points! not sure I would use the word subsidize since there are some differences, but I see what you mean...and although the common bonds are in place(but wildly different between CUs), they are much looser and there are always ways around them.