Establishing an account at a credit union usually requires a smaller deposit than that of a bank; credit unions usually require $5–$30 to open an account, while major banks sometimes require $50–$100 deposit. The required minimum deposit to join a credit union is called a share and establishes the depositor as a member with full ownership rights.
Tension has always existed between member-owned cooperative credit unions and for-profit banks in the United States. When credit unions were first organizing in the US in the early 20th century, the banking industry was opposed, remaining so ever since. Banks and bank trade associations consistently put anti-credit union legislation at the top of their agendas.
Due to their status as not-for-profit, member-owned financial institutions with no source of secondary investment capital, credit unions in the US are exempt from federal and state income taxes (but not from other forms of tax, such as payroll, sales, or property taxes). Credit union members themselves pay income tax on dividends earned through financial participation in the credit union; this is similar to the taxation structure enjoyed by many banks incorporated under Subchapter S of Chapter 1 of the Internal Revenue Code.
To extend their member service reach, many credit unions participate in shared ATM and branch networks. Most credit unions participate in the CO-OP Network, which allows members of participating credit unions to use nearly 30,000 ATMs without fees or surcharges. Shared branching is a cooperative venture whereby members of one credit union can perform basic transactions at no additional cost at any branch owned by other credit unions within the network.
Bank holding companies and their affiliates aggressively compete to provide services to credit unions through their ATMs networks, corporate checking accounts, and certificate of deposit programs. In 2007, the American Bankers Association (ABA) barred credit union employees from attending ABA-sponsored educational seminars. This includes online classes that require registration. Based on the pretext that the ABA only wants to serve its members, the ABA continues to try to weaken credit unions and take back the market share that credit unions currently hold.
United States credit unions typically pay higher dividend (interest) rates on shares (deposits) and charge lower interest on loans than banks. Credit unions therefore often have a higher cost of assets (i.e. interest expense as a percentage of average assets) than commercial banks, with aggregate U.S. credit union cost of assets being higher than the aggregate U.S. bank cost of assets in eight of the thirteen years between 1995 and 2007. Credit union revenues (from loans and investments) do, however, need to exceed operating expenses and dividends (interest paid on deposits) in order to maintain capital and solvency.
A credit union's policies governing interest rates and other matters are set by a volunteer Board of Directors elected by and from the membership itself.
Current 12 month CD rates in San Antonio, TX:
Bank of America: .03%
Wells Fargo: .05%
Chase Bank: .01%
USAA Federal Savings Bank: .71%
Security Service Federal Credit Union: 1.25%
Volunteer boards. Cooperative in nature. Not-for-profit organizations. Limited fields of membership. No access to secondary capital.
You want to piss of 90,000,000 Americans? Tax credit unions.
"Ah fuck. You are right." KYJelly, 11/6/12
"The future must not belong to those who slander the prophet of Islam." Barack Obama, 9/25/12
