New study finds removing credit union tax exemption could severely impact economy

WASHINGTON, DC (September 13, 2021) — A new study released today examines the economic benefits of the credit union tax exemption to consumers, businesses, and the U.S. economy. The study, commissioned by the National Association of Federally-Insured Credit Unions, found that all consumers benefit from having credit unions as an option in the financial marketplace. The study also found that removing the credit union tax exemption would have far reaching consequences for consumers and the economy. Credit unions are member-owned, not-for-profit cooperative financial institutions that serve defined fields of membership under the general oversight of volunteer boards of directors.

While banks have been lobbying Congress to remove credit union’s tax exemption, the study underscores the economic damage that would occur. The study found that removing the tax exemption status for credit unions would reduce tax revenue by $56 billion and reduce economic activity by $120 billion over ten years. The study also found it would eliminate 80,000 jobs a year over ten years.

“As not-for-profit cooperative financial institutions, credit unions have always put their members first by providing them with the best financial products, rates, and lower fees,” said Dan Berger, NAFCU’s President and CEO. “Today, 127 million consumers are members of a credit union. Consumers continue to recognize the benefits of credit unions and how a credit union can help them achieve financial freedom. The tax exemption status provided to credit unions has yielded dividends to consumers, Main Street businesses, and the U.S. economy through lower fees, better financial products, and better rates.”

The study also found that the credit union tax exemption benefits households to the tune of $15 billion a year. This benefit derives from credit unions passing along the value of their tax exemption to their members through low rates and fees, and superior service. For example, credit unions provide lower fees for consumers: Credit union rates on new and used car loans are 34 percent lower than bank rates; credit card and unsecured loan rates are 10 percent lower at credit unions; real estate loans are 3 percent lower at credit unions. Consumers with savings, checking, and money market accounts at credit unions earned interest that was 61 percent higher than banks; interest rates on CDs, IRAs, and KEOGH accounts were 66 percent higher at credit union. The study found that direct benefits to consumers from these lower rates range from $4.4 to $10.7 billion annually over the past ten years.

Lastly, the study found that non-credit union consumers benefit from the competitive influence of credit unions on other financial institutions. A 50 percent reduction in credit union market share would cost bank customers between $6.8 to $9.9 billion per year in higher loan rates and lower deposit rates.

Click here to read the study.


The National Association of Federally-Insured Credit Unions is the only national trade association focusing exclusively on federal issues affecting the nation’s federally-insured credit unions. NAFCU membership is direct and provides credit unions with the best in federal advocacy, education and compliance assistance. For more information on NAFCU, go to or @NAFCU on Twitter.


Molly Safreed, (NAFCU)

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