Choosing where to bank is a personal decision that has a big influence on how you manage your money and time. Your main choice is between a bank and a credit union. Banks and credit unions offer essentially the same products and services, but there are huge differences in the way they operate. Whether you’re just starting out or rethinking your current financial setup, here is what you need to know about the differences between the two:
Bank: For profit; profits get distributed back to shareholders.
Credit union: Credit unions tend to be local and have fewer branches, but thanks to ATM network sharing you can use most other Canadian credit union ATMs free of charge (there’s a network of 4,000 ding free ATMs, which is larger than some of the big bank’s ATM networks).
Bank: Big banks are present in most major cities, which will give you free access to your money nationwide. However, if you need to use another bank’s ATM, get ready to pay a higher service charge.
Credit union: You may not think that credit unions provide the latest technology; however, most provide mobile apps that are comparable or better to bank apps.
Bank: Banks (especially the larger ones), typically offer great technology. Banking apps will support your love for on-demand banking on your smartphone.
Credit union: For the 13th consecutive year, Canada’s credit unions were awarded the Ipsos Best Banking Awards for Customer Service Excellence and Branch Service Excellence (2017).
Bank: Banks fall short of credit unions when it comes to overall satisfaction.
Credit union: On average, the largest credit unions have lower fees than the largest banks.
Bank: On average, the largest banks have higher day-to-day chequing account fees than the largest credit unions.
(Based on a fee schedule survey of the five largest Canadian banks compared to the five largest Canadian credit unions.)
Credit union: Owned by credit union members; run by a local board of directors elected by fellow credit union members.
Bank: Owned by shareholders; run by a board of directors who aren’t necessarily bank customers.
7. Your role
Credit union: Members can vote on how their credit union is run.
Bank: Customers have no say in how their bank is run.
Credit union: Deposit protection ranges from up to $100,000 to an unlimited amount depending on the province (unlimited in British Columbia).
Bank: Protection up to $100,000 (CDIC—Canada Deposit Insurance Corporation).
At the end of the day, choosing a financial institution is an important decision. If you make the effort to ask questions and compare services, you’ll find the best home for your finances.
Interested in becoming a credit union member? Join Vancity today.