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Many people have switched from traditional banks to credit unions and the migration continues to grow. In addition to this, given that credit unions are non-profit institutions, they do not have to worry about returning profits to external shareholders unlike banks who have to return profits to their shareholders, which means running and maintaining a credit union is cheaper.
In the United States, Federal credit unions are chartered by and overseen by the National Credit Union Administration (NCUA), which also provides deposit insurance similar to the manner in which the Federal Deposit Insurance Corporation (FDIC) provides deposit insurance to banks.
The banks argue, correctly, that they have to pay taxes, so the playing field is not level, and it should be. The other argument on the banks’ side, although nowhere near as compelling as the tax issue, is that over the last two years, bank regulators have been beating up on banks to set aside more loan-loss reserves and strengthen their balance sheets.
Everyone leans on him and no one knows anything about the credit union except as he interprets the credit union, and, too often in the process of his interpretation proves conclusively that he doesn’t know what a credit union is. The right credit union is the credit union wherein the average member has an understanding of his credit union in all phases of its potentialities of service.
Branded The ‘It Makes Sense’ Loan, the aim was to prove that credit unions could offer a loan product that matched the convenience and ease of moneylenders’ offerings, addressed the exorbitant rates charged by them and yet was within Central Bank prudential lending guidelines.