In today’s weekend edition (May 6-7, 2006), the Wall Street Journal devotes an article to the rate advantage borrowers can get from credit unions (”Where to Look for Cheaper Loans - Credit Unions Often Do Better Than Banks”). We’ve long noted the consistent credit union rate advantage and have encouraged borrowers to at least check out these rates when shopping a HELOC loan.

Of course, one of the main reasons credit unions can undercut bank loans is the tax advantages they enjoy as “not-for-profit” institutions. This is a big bone of contention with banks, especially since credit union membership has mushroomed in recent years with relaxed membership rules. Today, just about anyone can join a credit union. Banks are starting to fight back in court filing lawsuits to challenge CU membership rules.

But regardless of whether or not you think credit unions have an “unfair” advantage, the benefits they offer to borrowers are real and costly to overlook. As the Journal article notes, tax breaks credit unions enjoy ultimately come out of your (taxpayers’) pocket, so getting payback via a reduced loan rate shouldn’t in be a cause for guilt.

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