Canada’s financial sector is dominated by the Big 5 banks. The country’s big banks are among some of the biggest banks in the world. They include Scotiabank, TD Canada Trust, Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC), and Bank of Montreal (BMO). However, there are other options for financial services. Credit unions offer much of the same services as the big banks without the frills. If you have ever wondered what credit unions are, you may be happy to know they are a great alternative for financial services, especially if you’re looking for affordability and better service.

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What are credit unions?

Like banks, credit unions are financial institutions. The main difference between a bank and a credit union is that members own a credit union. Credit unions operate as nonprofit organizations, to help their members. They want to provide high-quality products and services to their members. Any revenue generated goes towards fulfilling this aim. This is done through re-investment into the credit union, dividends to members, or donations to the community. Banks, on the other hand, earn profits and are accountable first and foremost to shareholders. 

While banks are federally regulated institutions, Credit unions are mainly regulated by provinces. Recently, some credit unions have grown to be regulated on a federal level. Even when regulated on a federal level, credit unions are still member-owned and run. Credit unions offer savings, chequing, RRSP, TFSA, mortgages, and credit services. In Quebec and other French-speaking communities, credit unions are known as caisses populaires (people’s banks).

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What are the differences between banks and credit unions?

While credit unions offer all the same services as banks, they offer fewer options. Additionally, credit unions are meant to serve their local communities. For this reason, you may only be able to join a credit union if you live, work, or attend school in a specific area. In general, banks offer more services, reaching more areas in the country. This is not always the case as many credit unions have become larger. 

Credit unions operate as nonprofit organizations. They have a responsibility to their members and their community. They reinvest their revenue into their community and members. Whereas banks aim to earn a profit for their shareholders who do not need to use their services as members. Credit unions can offer lower account fees, lower interest rates on loans, and higher interest rates for savings accounts. All these benefits align with delivering value to members. 

What are the benefits of a credit union?

• Better Interest rate on chequing and savings accounts.
• Lower account fees.
• Lower interest rates on mortgages and loans.
• Access to wide ATM networks, through a credit union network.
• Potential for higher deposit insurance.
• Customers’ voices have a greater effect.
• More flexible loan criteria, sometimes no “Mortgage Stress Test”.
• Better customer service.

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What are the disadvantages of a credit union?

• Less service delivery methods, however many larger credit unions now have online services.
• Less products and services to choose from.
• More conditions, like needing to be local to the community or buy a share to open an account. 
• Fewer locations and credit unions normally do not have the same number of branches as big banks. 

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Are credit unions safe in Canada?

Yes, credit unions are very safe in Canada. Both federal and provincial-regulated credit unions must have deposits protected. All provinces require the same baseline of protection given to the big banks. CDIC-insured banks must insure bank accounts for up to $100,000 in each account. Credit unions are required to provide the same or better protection. Some provinces have no upper limit on how much money can be protected in a credit union account. Here are details about Provincial Deposit Insurance for each province. 

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What are the 5 largest Canadian credit unions by assets?

Canada has many credit unions. With the largest number of credit union members being in Quebec. Quebec’s largest credit union is Groupe Desjardins. Below are the five biggest credit unions in Canada: 

1. Vancity – A British Columbia credit union
2. Meridian Credit Union – An Ontario credit union
3. Coast Capital Savings Federal Credit Union – A British Columbia credit union
4. Servus Credit Union – An Alberta credit union
5. First West Credit – A British Columbia credit union

Why are people switching to a credit union?

Many people use credit unions because of their strong member and community focus. These principles allow credit unions to offer lower interest rates on mortgages and loans. Credit unions can deliver tailored customer service to members. They can offer lower fees and better interest rates on deposits. Ultimately it is a personal decision to use a bank or a credit union. Most people who choose to use a credit union find their products and services to be just what they need, thereby avoiding any additional cost for online services. 

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Is it better to keep your money in a bank or credit union?

Is it better to keep money in a bank or credit union? – this ultimately depends on your financial goals and needs. Big banks tend to offer more products and services while being available across Canada. Credit unions on the other hand deliver services at the best value. They offer higher interest rates on deposits that will allow savings to grow speedier. If you live and work locally near a credit union, it may be the wiser choice for you. However, if you travel across the country and need access to a wide range of banking services, one of the big banks may be a better choice for you. 

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