Are you currently banking with one of Canada’s “Big 5”? If so, there’s a strong chance that you’ve wondered about better alternatives.
If you’ve already looked into switching banks, you probably noticed that none of them are particularly cheap – and they all seem to be constantly raising their fees. This is exactly why more and more Canadians are looking for alternative banking solutions. One of the most popular options is to use a credit union.
But what are credit unions, and how do they differ from banks? Let’s break it down.
Credit unions are non-profits, meaning they are customer-owned. Like banks, they provide chequing accounts, mortgages, business loans and investment advice. In Canada, credit unions only offer services to their customer-owners. Banks, on the other hand, can be privately owned or publicly traded, and they exist to make a profit.
While both types of institutions offer many similar services, there are also four fundamental differences in how they operate.
Generally, fees charged by Canadian banks (especially the larger ones) are much higher than those charged by credit unions – particularly when sending money overseas. Clients that hold non-savings accounts are also charged monthly fees by most banks.
With credit unions, most transactions are free, there are usually no monthly fees, and no minimum deposit or balance is required. Credit unions also frequently offer more favourable interest rates on loans and mortgages.
2. Services Provided
Banks offer their customers a wider range of services than credit unions. This is why they can charge higher fees. Most big banks offer an array of options when it comes to chequing and savings accounts. Credit unions typically offer only one or two kinds of each. Credit unions also fall behind when it comes to the variety of credit cards offered by them compared to larger banks.
Canadian credit unions, particularly those in rural areas, have fewer branches than traditional banks. However, as part of a community, their members often receive more personalised service. For example, credit unions may be more willing to approve loans for their members, and may even help educate them on proper financial management.
Although wire transfers have become outdated, most large banks are quite up to date when it comes to the latest in banking technology. Banks can also offer convenient online and mobile services to customers, allowing them to do banking wherever they may be (except when it comes to wire transfers, which often forces a trip to a branch). Additionally, many of the major bank apps in Canada are now fully compatible with e-wallets like Apple Pay and Google Pay.
The majority of credit unions don’t have their own apps, which means they can’t be linked with increasingly popular and convenient e-wallets.
4. Regulations & Insurance
In Canada, credit unions and banks are regulated differently.
Canadian banks are overseen by the Office of the Superintendent of Financial Institutions. Deposits held in a bank are covered up to $100,000 by the Canada Deposit Insurance Corporation.
When it comes to credit unions, they are mostly regulated by the province in which they are located. Credit unions also offer a minimum of $100,000 in deposit insurance, but their deposits are protected by different province-specific insurers.
Let’s Sum It Up
Because credit unions are non-profits, they are more likely to provide competitive rates, lower fees and an easier loan process. But, as a result of this, credit unions are also more limited in their service offerings.
Ultimately, when choosing between using a bank or credit union, you need to choose the option that best meets your unique needs. It’s imperative for your bottom line that you work with a financial institution that can provide you with the exact types of services you require. If you choose a financial institution that can keep step with the growing needs of your business, it’ll make your life that much easier.
What Can You Do With REMITR?
Pay Lower Fees: REMITR offers Canadian businesses and individuals the best service available to send and receive payments internationally. Our fees are lower than any Canadian bank, so you can easily avoid poor exchange rates and inflated transaction fees for all your business payments, regardless of transfer amounts.
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Time is money – save them both by getting in touch with REMITR today.