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Should you do your banking at a credit union? Find out the key differences between credit unions and banks in Canada.
Credit unions are member-owned financial services cooperatives. They provide services like chequing and savings accounts, mortgages and investment products, for both businesses and individuals.
Credit unions are non-profit organizations, run by a volunteer board of directors for the benefit of members. Each member has a vote in the election of directors.
Credit unions give back to their local communities by supporting small businesses, promoting financial literacy, providing alternatives to payday lending and similar initiatives. According to the Canadian Credit Union Association, credit unions on average donate 3.8% of after-tax profits to charity each year.
Credit unions typically offer higher rates on savings products and lower rates on mortgages than banks.
While bank deposits are insured by the federal Canada Deposit Insurance Corporation (CDIC), credit union deposits are protected by provincial deposit insurance corporations. Some provinces have limits on the amount of coverage, while others insure 100% of deposits.
Example: “Mel does his banking with a local credit union rather than a Big Five bank because he wants to support his community. He also enjoys superior deposit insurance, because he lives in Alberta, where 100% of credit union deposits are insured, more than the $100,000 limit on CDIC-insured bank deposits.”
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