The Credit Union Difference

Why do banks attack credit unions?
For decades, for-profit banks have tried to eliminate or reduce competition provided by not-for-profit credit unions. This is so banks can earn more profits for stockholders.  

Is credit union competition hurting banks?
No way. Credit unions believe it’s good to have strong, profitable businesses and banks in our communities.  And banks are doing well.  Profits at Iowa's federally insured banks rose to $641 million for the first nine months of 2014, according to the Federal Deposit Insurance Corp. The aggregate net income through Sept. 30 was up about 4.4% from $614 million for the first nine months of 2013.

Do credit unions pay taxes?
Yes. Credit unions—including Dupaco—pay taxes.  Each year, your credit union pays property, sales and employment taxes, as well as a special monies and credits tax paid only by Iowa-based credit unions on their reserves.

At the same time, the members pay taxes on their credit union dividends when they file their annual tax forms.

Credit unions are exempt from paying corporate income taxes. That’s because we promote the economic well-being of our members, especially those of modest means, through a system that is member-owned, volunteer-directed and not-for-profit.

Where do credit unions get the money to pay their taxes?
A tax on credit unions really is another tax on members. The money credit unions pay in taxes comes directly from member benefits.  This would mean lower rates on savings, higher loan rates, and less convenience.

How are banks and credit unions different?
Here's a visual that breaks down the main points of differentiation.

the Credit Union difference


Are bigger credit unions, like Dupaco, different than smaller credit unions?
Not-for-profit credit unions of every size focus on helping working families get ahead.

Dupaco’s structure and mission are the same now with 85,000 members as it was in 1948, when 10 employees of the Dubuque Packing Company formed the credit union to help each other improve each other’s financial position.  Sixty-seven years later, it’s the same mission, same structure—Dupaco is just making an even bigger positive impact.

If banks say credit unions have an unfair advantage, can banks become credit unions?
Yes.  If banks truly believe the credit union structure has more advantages, then those banks can choose to become credit unions.  However, in converting from a bank to a credit union, the new institution must:

  1. Forego profit maximization and focus solely on the needs of the member/owners;
  2. Distribute net income not to stockholders, but only as dividends to all members and for capital deployment;
  3. Allow the membership to vote for the board of directors—each member gets one vote, no matter how much he/she has on deposit at the credit union;
  4. Have board members who serve as unpaid volunteers;
  5. Only generate capital through the income stream;
  6. Follow increasingly stringent capital requirements;
  7. Agree to be among the most highly regulated financial institutions in the nation;
  8. Restrict business lending activities to just 12.25% of assets;
  9. Adhere to much more stringent business lending guidelines;
  10. Restrict service to people through a defined common bond, which is approved by the regulator;
  11. Not offer in-house trust services;
  12. Continue to pay property, sales, employer-related taxes, as well as a monies and credits tax on reserves.

What else does Dupaco do to help working families create financial sustainability?
GreenBack Impact
During a 3.5 month period in 2014, (half July, August, September, October), members brought loans back to Dupaco and we saved them more than $3.5 million dollars in interest.  That’s money directly into members’ pockets.  Imagine the impact Dupaco and other credit unions during the year!
 
Anyone Can Access a Free Dupaco Money Makeover
Dupaco takes seriously our mission to promote thrift and help families get ahead in life. Our team of professionals assists members and non-members through free one-on-one consultations intended to help individuals review their entire financial picture, and look for every possible way to restructure allocations so they can pay less and save more. Dupaco can help individuals identify ways to cut costs and free up money to systematically save for a brighter future. For anyone—members AND nonmembers.
 
Dupaco Educates Thousands with Free Credit History Lessons
Utilizing free one-on-one personal consultations, public seminars, and on-site presentations at businesses, Dupaco has taught thousands of consumers how to drive up their credit score and pay less through Credit History Lessons. As a result, many members who had past credit difficulties have been able to reduce interest rates, eliminate fees, and get back on the road to financial success. Dupaco will even lower loan rates for members as their score improves. For anyone—members AND nonmembers.
 
Power of Purchasing Sustainable Wealth-Building Assets
Individual Development Accounts (IDA)
Dupaco opens the savings accounts and matching funds will come from the Dupaco R.W. Hoefer Foundation. IDAs are for participants who meet income guidelines and are residents of the state of Iowa. Funds are then used by the individual to purchase a specific asset, such as a home, starting or expanding a small business, paying for education or job training, or purchasing a vehicle to get to work.
 
Dupaco is a Thrifty Refuge from Predatory Payday Lenders
Nearly one of every four loans made by Dupaco is a small-dollar loan of $2,500 or less. In 2015, Dupaco made 7,903 loans that were $2,500 or less. These do not include credit card advances or overdraft protection.
 
Loans $2,500 and less:
Number of Loans Made: 7,903
Average Loan Balance: $1,186
Average Interest Rate: 12.17% APR
Loan Fees Charged: $0
Repayment Terms: Flexible
 
Of those 7,903 loans, these were $500 and less:
Number of Loans Made: 1,527
Average Loan Balance: $427
Average Interest Rate: 12.28% APR
Loan Fees Charged: $0
Repayment Terms: Flexible
 
Payday lenders may argue that the APR is misleading because loans are often paid back within two weeks. But, if the borrower is unable to repay the loan in full, the cost of the loan escalates. At this point the loan is “rolled over” into a new loan. If this continues, the original payday loan becomes expensive and starts a cycle of debt. By setting up loans with easier repayment terms, Dupaco can help individuals stop the borrowing cycle.

Comments (1)
Very Informational
Joe
 • 704 days 8 hrs 16 mins 41 secs ago
Thanks for the information here. I read it all. Banks are predatory in their practices. Our system is not based on sound principles of money, but on distortions and fractional reserve banking. This means, banks do not have your deposits on hand, only a very small fraction. The whole FDIC system only has less than a 1% of the amount depositors have on deposit in the banking system as a whole in our country. So therefore, the term "Fractional Reserve" is true to its name. If banks want to complain they should become Credit Unions. Furthermore, banks DON'T like competition and they can never get enough profits. They are constantly, even in the worst of recessions, making a profit. They have no reason to complain. People leave banks for Credit Unions because the service offered by Credit Unions are usually better and they are treated better. Have a great day!
 

Very Informational
Joe
 • 704 days 8 hrs 16 mins 41 secs ago
Thanks for the information here. I read it all. Banks are predatory in their practices. Our system is not based on sound principles of money, but on distortions and fractional reserve banking. This means, banks do not have your deposits on hand, only a very small fraction. The whole FDIC system only has less than a 1% of the amount depositors have on deposit in the banking system as a whole in our country. So therefore, the term "Fractional Reserve" is true to its name. If banks want to complain they should become Credit Unions. Furthermore, banks DON'T like competition and they can never get enough profits. They are constantly, even in the worst of recessions, making a profit. They have no reason to complain. People leave banks for Credit Unions because the service offered by Credit Unions are usually better and they are treated better. Have a great day!
 

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