The high fees of the Big Five banks in Canada have a lot of people running into the arms of digital no-fee alternatives…
But if you still appreciate the personal touch of a brick-and-mortar bank location, you’re likely left to the devices of high bank fees and subpar products in exchange for the bright smile of a bank teller.
What if there were a middle ground? A place to store your cash that still has physical locations, but more options than just the Big Five.
Your local credit union is an option many people overlook. Plus, with their community-focused business model, you could be helping out more than just your wallet.
What is a credit union?
Credit unions are financial institutions (aka “banks”) that offer full service to their customers. In fact, they often pride their customer service as what sets them apart from their Big Five counterparts.
Each credit union is an independent and locally-controlled association that’s owned by its members. As a member, you have a vote on the issues that matter to you and your voice carries the same volume no matter how much money you have tied up with the union.
Products and ATMs
Most credit unions offer the same products as a normal bank, like:
- chequing accounts,
- savings accounts,
- loans,
- credit services,
- credit cards, and
- mortgages.
From what I’ve seen, their rates are mostly on par with most of the Big Five banks, but they often have slightly better mortgage rates. Because you likely have to be a member in order to take advantage of mortgages, it may be worth having an account with them just for the interest savings.
Related: What Are The Best Mortgage Rates In Canada?
Despite what you may think, credit unions have a pretty great network of ATMs. Unlike the Big Five, which often charge you a fee for using an ATM from another bank, credit unions on the Exchange Network offer more than 4,000 ATMs nationwide.
And they’re all for “ding free” use by any member from any credit union – as long as your union is part of the network, of course.
Becoming a member of a credit union
Most of the time, you have to be a citizen of a specific province (or sometimes a specific city) to become a member of the credit union. This, of course, goes hand-in-hand with its community-focused nature.
You’ll likely have to pay a small fee upon entry, usually between $1 and $15, which is actually buying a share of the company. This ensures you’re not only a member, but a genuine part of the credit union.
Credit union vs banks
Curious about what separates a credit union from a bank? Here are some of the biggest differences:
| Credit union | Bank | |
|---|---|---|
| Business model | Not for profit, community focused | For profit |
| Ownership | Members | Shareholders |
| Board of directors | Often volunteers | Paid |
| Who can join | Generally requires living in a specific location or other affiliation | Open to anyone |
The major thing that sets them apart from the bank? Their not-for-profit business model. Everything they make is reinvested into the business, given to their members, or donated to local charities. This is why they’re considered a community-conscious alternative to the Big Five.
Their board of directors are not only often volunteer-based, but they’re also elected democratically among its members. Each member often gets one vote each, no matter how many accounts they have.
This sets them apart from the commercial bank model, which has board members elected by shareholders with purely financial motivations.
Who’s better at what?
But let’s cut to the chase – which one will give you better, more convenient services and products?
| Credit union | Bank | |
|---|---|---|
| Product variety |  |  |
| Account interest rates | | |
| Account fees | | |
| Mortgage rates | | |
| ATM access | * | |
| Customer service | | |
| Number of branches | |
|
| Credit cards | |
|
*Assuming they’re part of the exchange ATM network.
As for most things, it really depends what you’re looking for.
If you’re not the type to settle and may find yourself outside the comfortable reach of any one credit union, a nationwide bank may suit your needs better.
But if you’ve planted your roots and love your community, a credit union can be a great mutually-beneficial place to store your money.
Tip: If your biggest concern is the LOWEST fees and the BEST interest rates – a digital bank will serve you better than both credit unions and the Big Five. Check out our comparison here.
Biggest credit unions in Canada – by province
According to the Canadian Credit Union Association (CCUA), these are the top credit unions in each province, based on asset size:
- Alberta: Servus Credit Union (#4 nationwide)
- British Columbia: Vancity (#1)
- Manitoba: Steinbach Credit Union (#7)
- New Brunswick: UNI Financial Cooperation (#13)
- Newfoundland and Labrador: Newfoundland and Labrador Credit Union Limited (#64)
- Nova Scotia: Credit Union Atlantic (#71)
- Ontario: Meridian Credit Union (#3)
- Prince Edward Island: Provincial Credit Union (#87)
- Quebec: Desjardins
- Saskatchewan: Conexus Credit Union (#6)
Note: Quebec works a bit differently than other provinces. All Quebec credit unions (or caisses populaire) are federated by Desjardins. Everywhere else they’re run independently. Quebec was excluded from CCUA’s list.
Check out credit unions near you with this handy locator.
Credit unions that offer service nationwide
Despite the local focus of most credit unions, the expansions of virtual banks has made it easier for credit unions to be based in the community but spread their services nationwide. These are called federal credit unions.
Let’s look at the 3 biggest, all of which have no monthly fees.
| Credit Union | Alterna Bank | Coast Capital Savings | motusbank (Meridian) |
|---|---|---|---|
| Chequing accounts | 1 | 4 | 1 |
| Daily transactions | Free and unlimited | Free and unlimited | Free and unlimited |
| Savings accounts | 3 | 1 | 3 |
| Savings rate | 1.2% | 0.75% | 1.0% |
| ATM access | Over 3,300 | Over 4,000 | Over 3,700 |
| Credit cards | |
5 | |
| Student options | |
|
|
Want the best rates and fees anywhere in Canada?
Some credit unions offer rates that can compete against the Big Five…but these are vastly overshadowed by some digital bank offerings in Canada.
That being said, Alterna Bank has great saving rates at 1.2% – rivalling some of the best digital banks.
Should you join a credit union?
Like most things, it depends on what you want out of your bank.
If your focus is the best rates possible, credit unions may not be your best choice.
But if you want a community-focused experience with physical locations and better rates than the Big Five, check out your local credit union.
You could be surprised at what you might find.
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