Consumers do not benefit from credit unions' tax exemption, according to a study by Wake Forest University accounting professor Yvonne Hinson Stewart. Credit unions use the savings from their tax exemption to cover higher personnel and fixed-overhead costs, she finds. They do not offer significantly higher rates on savings accounts or lower rates on loans, she says.
To support her conclusion, Ms. Stewart examined the net interest margin, which is the difference between interest income and expense. She finds little difference between the margin at tax-exempt credit unions and tax- paying mutual thrifts. But she finds credit unions on average spend more on personnel and operating expenditures than mutual thrifts.