How are credit unions different from banks?

Credit unions are financial institutions where you can safely store and invest your money, just like a bank. Credit unions provide:

  • chequing and savings accounts
  • mortgage
  • business and personal loans
  • investment advice

Credit unions are known to provide more personalized service to their clients than banks do, despite being smaller.

How are credit unions different from banks?

The Basics

A credit union will provide your family with all of the same financial solutions that a bank will. The main difference between a credit union and a bank is how they are structured. Credit unions are owned by their members (ie. anyone with money in the credit union). A democratically elected board of directors made up of local community members oversees a credit union.

Benefits

Because of this local ownership, a credit union can offer its customers the following:

  • Banking services, often with better interest rates (ie. more savings) than a big bank can offer.
  • Membership. By putting your money in a credit union account, you automatically buy shares in the credit union, making you a member.
  • Client voices are heard. Credit union members are shareholders in the company. As such, clients are invited to the Annual General Meeting and are eligible to vote for the Board of Directors.
  • Personal service. Because credit unions are smaller, service providers will often remember their clients and offer more personalized service.
  • Investment in the community. Because credit unions are owned and operated by community members, credit unions stay active in the community and frequently sponsor or partner with local organizations.
  • You can withdraw your money for free at any ATM operated by a credit union, not just your own. This means that if you’re a member of First Calgary Financial, you can also freely use the ATMs provided by any other credit union, anywhere in Canada.
  • Equality. No matter how much money you have in your credit union account, you will have access to the same offers and rates as everyone else.

While credit unions can be excellent places to save your money, you should consider these factors before you join one:

  1. Because they are smaller, credit unions may have fewer options for savings accounts or credit cards.
  2. They may have fewer branches and ATMs than a big bank would. You may also have to drive further to find an ATM or do your banking.

Credit unions can offer the same services and options that big banks do. They often offer personalized, friendly service and investment in your community. However, they may not offer the same conveniences as your regular big bank. Make sure to weigh your options before choosing which company to bank with. What features are most important to you when choosing where to save your money?

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Thanks to Greg Sande for help with this guide. If you want to suggest a correction to this guide, or want to submit one of your own, please contact us.