We're spoiled for choice when it comes to banking in Canada, but if you're selecting a credit union vs. bank, you may not know where to start. While similar, the two do have some key differences. For starters, you become a member of a credit union, but a client of a bank.
The personal touch and community focus of credit unions are very enticing, but the nationwide convenience of the big banks and their wide range of specialized products can be attractive. Credit unions offer many of the same high-quality products that banks do, but the number of products available is typically more limited.
Understanding the differences between banks and credit unions can help you make the best decisions for your household. Below, you'll find a comprehensive comparison of the two, including their pros and cons, as well as tips on how to make the right choice for you and your family.
Key Takeaways
- Banks are for-profit while credit unions are not.
- Banks typically offer a larger choice of financial products and services
- credit unions focus on quality over quantity.
- Banks often charge more and higher fees than credit unions, but credit unions require a membership fee.
- Ask yourself if you value reputation, options, and accessibility more than quality customer service and community involvement.
Comparing credit unions vs. banks
The most important differences between banks and credit unions involve ownership and profit. Credit unions are owned by their members and therefore don't have to worry about generating profits for shareholders, unlike publicly traded banks.
This chart shows the main points of reference to consider when comparing banks and credit unions in Canada:
| Features | Bank | Credit union |
|---|---|---|
| Type of organization | Private or publicly traded | Not-for-profit |
| Responsibility | To shareholders | To members |
| Membership requirements | * Age of majority * Resident of Canada | * Age of majority * Resident of Canada * Often, you must be a member of a specific profession or reside in a certain geographic region |
| Products | Full array of banking, investment, and borrowing products and services | Generally, more limited products and services available |
| Branches and ATMs | Many across Canada | A few within a small area |
| Fees | High, frequently charged | Low, infrequently charged |
| Interest rates | High rates for loans, low for savings | Low rates for loans, high for savings |
| Technology | Innovative apps, websites, and online services | Basic apps, websites, and online services |
| Insurance | CDIC | CDIC or a provincial deposit insurance program |
| Customer service | Adequate | Excellent |
While banks and credit unions tend to provide many of the same products and services, banks have a more diverse customer base and work to remain competitive with a wide variety of unique, specialized products.
Credit unions tend to focus on quality over quantity and often have just one offering for each product category.
The pros of credit unions and banks
Here, we lay things out so you can see the pros of both banks and credit unions:
Banks:
- A wide variety of specialized products and services
- Convenient locations across the country
- Specialized departments and expertise
- Excellent, up-to-date technology
- Partnerships with digital banks to offer no-fee accounts
Credit unions:
- Fewer and lower fees
- Better interest rates
- May be more likely to help clients with no or poor credit
- Community focus
- Member benefits and profits
The cons of credit unions and banks
The other side of the coin must be considered as well, so here's a look at the cons of banks and credit unions.
Banks:
- High service fees (and more of them)
- High interest on loans
- Less reliable customer service
- Bureaucratic red tape prevents transparency of operations
Credit unions:
- Fewer, less convenient locations
- Smaller product listing
- Membership requirements and restrictions
- Older technology
How to know if a bank or credit union is best for you
Everyone's reasons for needing this banking solution will vary, but it's these reasons that will help you decide between banking with credit unions vs. banks. Based on your own reasons, you'll need to consider the factors that provide value for you.
For instance, a person who's a frequent traveller will likely value technology and easy access to services. A big bank would be the best fit for them. On the other hand, someone who lives in a small town and prefers to support local businesses will value the community focus and personal touch that a credit union provides.
You can always choose both – there's no rule that says you can't have multiple products and accounts in multiple locations.
Consider the Coast Capital Elevate Chequing Account – this credit union chequing account comes with unlimited transactions, earns rewards on spending, and provides free Exchange Network ATM use across Canada, with some special features to boot. It covers all the bases and still has that community-based institution feel, for a $16.95 monthly fee.
And then there's the Scotiabank Preferred Package, a powerhouse of a banking package that includes exclusive rates and rebates on other accounts, and access to more than 900 bank branches and nearly 3,600 ATMs across the country. There is a $16.95 monthly fee, but this gets you all the bells and whistles.
You can learn more about both of these account options here:
The Coast Capital Elevate Chequing Account offers complimentary Coursera*** access and identity theft protection, in addition to free unlimited e-Transfers, more included ATM transactions and a credit card rebate.
- Monthly fee discounts available****
- Annual fee rebate on select Coast Capital credit cards
- 50 free cheques annually
- Free ID protection and password manager
- Free access to Coursera***
- Limited unaffiliated ATM withdrawals and slightly higher ATM fee
- Not available in Quebec
- Have a SIN
- Age of majority in your province
- Live in Canada (except Quebec)
- New members must purchase a minimum of $5 in membership equity shares
$125 GeniusCash + New members can get $400** when they open and use an Elevate Chequing Account.
- Free access<sup>***</sup> to Coursera's global learning platform (Value $538/year)<sup>*</sup>
- Free identity theft protection and password manager with ID Assist
- New members must purchase a minimum of $5 in membership equity shares
- 2 free Interac network Canadian ATM withdrawals per month<sup>†</sup>
- 3 free International ATM withdrawals per year<sup>††</sup>
$125 GeniusCash + New members can get $400** when they open and use an Elevate Chequing Account.
There's not much better than unlimited free transactions, but the Scotiabank Preferred Package comes packed with even more perks to seal the deal. These include a bonus interest rate on the top Scotiabank savings account, a first year annual fee waiver on select cards, and points on every day purchases with the Scene+™ program.
- Kickstart your account with a $100 GeniusCash bonus
- Get a welcome bonus worth up to $700 (ends October 30, 2025)
- Unlimited debit transactions and Interac e-Transfers
- Ability to waive monthly fee with a minimum balance of $4,000
- Earn Scene+ points on your debit transactions
- First year annual fee waiver on select Scotiabank credit cards
- Age of majority
- Canadian citizen
$100 GeniusCash + Get up to a $700* welcome bonus + Earn Scene+ points on all debit purchases.- First year annual fee waiver (up to $150) on select credit cards
- Earn Scene+ points on debit transactions
- Earn an additional 0.05% on your Momentum Plus Savings Account
$100 GeniusCash + Get up to a $700* welcome bonus + Earn Scene+ points on all debit purchases.FAQ
What is a bank vs. credit union?
Both are financial institutions that offer products and services to Canadians. Each type of institution is unique – the main difference is that banks are privately owned or publicly traded, while credit unions are owned and operated by their members.
What's the difference between banking with credit unions vs. banks?
There are several differences, but the most important details involve ownership and profits. Banks are privately owned and publicly traded, focused on generating profits for shareholders. Credit unions are not-for-profit organizations run by their own members.
Should I go with a big bank or a local credit union?
This decision depends on what you need and what features of a financial institution are valuable to you. For example, some people value a credit union's community involvement, while others value the security of an established, nationwide bank.
How do you join a credit union?
The process is similar to opening a typical bank account, with one main difference. After filling out the usual paperwork with your personal info, you'll be required to pay a small membership fee.
Is it better to use a bank or credit union?
The better option for you is based on your needs and preferences. For example, it's best to use a bank if you travel and need access to multiple locations. If you prefer to support your community and local businesses, credit unions are the way to go.
What are three disadvantages of a credit union?
A few disadvantages of credit unions are that they typically have fewer locations than banks, offer a limited number of products overall, and require membership that may come with restrictions.
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