Credit unions are a type of financial organizations, which make up a significant part of the Canadian banking system. Today, Canada's credit union has more than 5 million users and hundreds of lines of credit.
While credit unions are popular, especially in western Canada, you may never have thought much about them. If you've been working with the thought that credit unions are inferior to banks, it's time to take another look. From the most profound benefits, people can save money on the best interest rates.
What does a Credit Union Mean?
In Canada, a credit union is a mortgage body that offers many of the same products as banks. Credit unions provide chequing accounts, savings accounts, investments, like guaranteed investment certificates (GICs), credit cards, mortgages, loans, lines of credit, and registered accounts, like RRSPs and TFSAs. Many credit unions offer business banking, as well.
The main difference between credit unions and banks is that credit unions are not-for-profit organizations owned by their members. Unlike banks, whose primary responsibility is to their shareholders, credit unions exist solely to serve their members.
The Difference Between Credit Unions and Nationalized Banks
The main difference between the two types of financial bodies is that banks are seen as profit-making bodies, while credit unions are considered non-profit-making bodies.
Credit unions, in principle, exist to serve a body of individuals tied by a strong bond, which may be based on location, employer, faith, or membership in another organization.
To serve its brand of people, a credit union provides financial products based on favorable conditions through different offers. This means that instead of offering bank account information to customers and dividends to owners, as banks do, credit unions offer small dividends and discounted loan rates to a small group of people.
Choosing between a bank and a credit union involves some tradeoffs. Credit unions most often provide better customer service than nationalized banks do, though the rates for smaller banks are better than other options. Credit unions also offer higher interest rates on deposits and lower rates on personal loans. Nationalized banks often adopt new technology and tools to improve their services. For example, broad ATMs and branches. Networks are the norm for big banks; credit unions keep up with large, cooperative networks of ATMs and shared branches.
Top Questions to Consider Before Opting for Credit Union
- What Fees Does the Bank or Credit Union Charge? It is one of the primary questions considered by a property buyer. Always ask about monthly maintenance and overdraft fees, and the trending rates. There is no denying that credit unions have often been observed as a cheaper option for bank accounts, but there are many mortgage and investment web portals that say that’s no longer true. The only way to proceed is by professionally checking each credit union body.
- How Many Branches and ATMs Do They Have? If in-person service is important to you, look at banks and credit unions that have local offices. If you need to withdraw cash from time to time, make sure you have enough options to use ATMs and other bodies to make payments.
- What Interest Rate Does the Bank Or Credit Union Offer? For this, you need to refer to the right website and check out the interest rates on different accounts that are trending today as a rising option.
What are the Benefits of Credit Unions Over Banks in Canada?
- Excellent Services at the Lowest Fees. One of the most attractive benefits of credit unions is that they aren't profit-driven. They offer significantly higher rates of interest on all account types. They typically charge lower interest rates on loans and mortgages and also have the lowest prices.
- Par Customer Service. Today, many community banks pride themselves on providing a personal feel to make you feel valued. There is no denying that many of the credit subsidized bodies have won many awards in this respect.
- Broad Access to ATMs. Today, there is no denying that access to ATMs provides a lot of understanding from common banks. Unlike banks that charge you for using a competitor’s ATM, a vast number of credit unions are part of the Canada-wide EXCHANGE Network, which gives members complete access to a network of free ATMs.
- Deposit Insurance. Most Canadian credit unions are provincially regulated, and each province has $100,000 minimum deposit insurance.
- Use of Credit Union Tools. Today, most Canadian credit unions have the latest hi-tech personal finance tools, such as banking via mobile devices, helping them provide unprecedented access and convenience to the banks and credit unions.
- Credit Unions Are a More Personalized Way of Handling your Finance. As the economy becomes more complex, Canadian credit unions banks are streamlining their loan procedures; you'll have a better chance at securing personal and small business loans at your local credit union.
- Peace of Mind. Customer satisfaction with credit unions has consistently rated higher than for big banks. In fact, surveys find credit unions to be a trusted segment of the financial services industry.
- Best Choice for People Who Are Looking for Something Different Over Banks? Credit unions are not-for-profit cooperatives owned by their members, not stockholders. That means the whole reason they exist is to assist the financial wellness of their members.
Today, nationalized banks have all the brand recognition, but credit unions are often very competitive, helping people make better financial decisions. The next time you’re shopping for a financial product, like a chequing or savings account, keep credit unions in mind. You might find they have the best deal for exactly what you need.