Central City Credit Union

By Patricia Wesenberg, New Jersey Star-Ledger

As tax reform picks up speed in Congress, special-interest groups are storming Capitol Hill to ensure they get favorable tax treatment.

Fortunately, some groups — including credit unions — are looking out for the interests of hardworking Americans in this tax reform debate.

For years, big banks have been trying to saddle their nonprofit credit-union competitors with new taxes. They see a congressional tax reform push as their best chance to sneak such taxes in.

Consumers should hope that the big banks don’t succeed. New taxes on credit unions would pick the pockets not just of their 96 million predominantly middle-class customers, but those of all Americans — by reducing competition in the financial services sector.

Credit unions and banks offer many of the same services, such as checking accounts, savings accounts and home mortgages. But they couldn’t be more different in philosophy and structure.

As nonprofit financial cooperatives, credit unions exist to benefit their member-owners. They do so by charging low or no fees and offering higher interest rates on savings and lower rates on loans. They’ve advanced that mission since the 1930s, when Congress authorized their creation and granted them nonprofit status.

Banks, in contrast, are obligated to maximize profits for shareholders. And profitable they are, with some of the highest margins of any industry.

Today, roughly 40 percent of Americans belong to credit unions. They’ve proved to be especially valuable for middle-class families, small-business owners, low-income seniors and others looking to avoid the fees that have proliferated at banks.

The majority of credit unions don’t have minimum balance requirements. Nearly three-quarters of credit unions offer free checking, compared with just 39 percent of banks. Competitive pressure from credit unions has no doubt forced many banks to rethink their fees — or eliminate them altogether.

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