NAFCU Unveils Landmark Study on Credit Unions’ Benefit to the Economy

Patty Briotta
Director of Public Relations

WASHINGTON – The National Association of Federal Credit Unions (NAFCU) today released a landmark study (attached) illustrating the potentially devastating impact on the U.S. economy if the credit union federal tax exemption were eliminated.  Due to reduced competition, all consumers, regardless of credit union membership, would face higher interest rates on loans and lower interest rates on deposits.

The study, entitled “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy,” found that loss of the credit union tax exemption would cost the federal government $15 billion in lost tax revenue, $148 billion (in 2010 dollars) in GDP, and 1.5 million lost jobs over the next decade.

“This study shows how vitally important credit unions are to all Americans, not just those who are members of a credit union,” said NAFCU President and CEO Fred Becker. “It is clear that the benefits of the credit union tax exemption are a great boon to our overall economic welfare and prosperity and that its preservation should be of the highest priority.”

Some of the key findings include:

  • The total benefit to U.S. consumers from the presence of the federal tax exemption for credit unions is approximately $10 billion per year. From 2005-2011, the direct consumer benefit totaled $72.6 billion.
  • $1.5 billion per year in federal income tax revenue would be lost due to the reduction in consumers’ personal income as a result of fewer credit unions in the marketplace. This is triple the Senate Budget Committee’s 2010 estimate of foregone revenue from the credit union federal tax exemption ($500 million for FY’12).
  • Credit union savings and loan rates outperform bank rates across the board.
  1. Credit union rates on new and used car loans are 26 percent lower than bank rates, on average.
  2. Credit card rates are 9 percent lower and unsecured loan rates are 14 percent lower at credit unions.
  3. Credit union home equity loans are 6 percent lower and first mortgages are 2 percent lower.
  4. Interest rates on savings, money market, interest checking, and CDs are 25 percent higher at credit unions, on average.
  • Bank customers benefit from better credit union loan and deposit rates due to increased competition keeping rates low. The total cost to bank customers if there were a 50 percent reduction in credit union market share ranges from a low of $2.4 billion to a high $6.3 billion per year over the period 2005-2011 in higher loan rates and lower deposit rates, totaling almost $30 billion.

The authors of the study are Robert Feinberg Ph.D., professor of economics at American University, and Douglas Meade, Ph.D., director of research at Interindustry Economic Research Fund, Inc.

For more information on the study and the credit union tax exemption, go to

About Us:
The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.

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