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Daily Banking

The difference between banks & credit unions

March 15, 2023
5
min read

It’s worth taking a second look at your financial institution—it could save you time and money.

Person holding a phone in front of their laptop, next to a dog

Feel like you’re losing too much money to monthly fees?

Part of what you pay comes down to who you bank with.

Your financial institution affects more than the cost of your e-Transfers and service fees. It also determines how much you save through interest rates on loans or savings accounts.

So, who should you bank with?

At a bank or credit union, you can:

  • Take out a loan, mortgage, or line of credit
  • Open a chequing or savings account
  • Set up a direct deposit and deposit cheques
  • Apply for a credit card
  • Invest your money in stocks, bonds, mutual funds, or GICs

But if both financial institutions offer similar services…what’s the difference between a credit union and a bank?

What is a bank?
A financial institution where you can open a chequing account, borrow money, or invest in the market. In Canada, you’re probably familiar with the “Big Five” banks. Whether you live in Newfoundland or Manitoba, you can open an account with any national bank.
What is a credit union?
A credit union is a financial cooperative. Credit unions (or caisses popularies) are local and offer similar financial services as a bank. To become a member, you’ll need to purchase a one-time share.

We’re looking at how banks and credit unions measure up when it comes to your financial goals:

Customer vs member

When you open an account at a bank, you become a customer.

But at a credit union? You become a member.

This small distinction may not seem like much, but it reflects how differently these institutions are run.

Customers pay fees to access the products and services at a bank.
Members are part owners of the credit union with a say in how the organization operates.  

At Cambrian, our members don’t pay banking fees. We reimburse members through Unfee, our patronage program. To qualify, members need to set up a monthly direct deposit (like pay from their employer or a pension).

Digital services

For many people, their first bank account was opened with whichever financial institution was located closest to them.

Thanks to digital services, you’re no longer limited by your physical location. You can choose a financial institution that aligns with your personal preferences and open an account without stepping foot in a branch.

Through Cambrian’s website or mobile app, you can open a bank account, meet with a financial advisor, or apply for a loan—all from the comfort of your home. It’s safe, simple, and secure.

And with the ding free program, you can use any Canadian credit union ATM, free of charge. This is an even bigger ATM network than most banks offer!

To find a credit union ATM near you, you can use the CCUA map or install the ding free locator app on your phone.

National vs provincial

Banks are federally regulated, which means anyone who lives in Canada can open an account.

Credit unions are either federally or provincially regulated.

If a credit union is provincially regulated, only residents of that province or territory can become members of the credit union.

That’s why credit unions tend to be more community-focused and support local initiatives, including charities, scholarships, and more.

Last year, Cambrian supported 65 local organizations through sponsorships and donations. Learn more about how we give back to our local communities.

Financial services

Credit unions offer a full suite of financial services–the same ones you’d find at any bank.

With Cambrian, you can receive investment advice and advisory services. Meet with a Cambrian Advisor to talk about retirement planning, invest in the market, or open a registered savings plan.

Deposit insurance

If your financial institution ran out of funds, do you know what would happen to your money?

In Canada, both banks and credit unions offer deposit protection.

But one key difference between a bank and a credit union is how much protection they offer.

Banks are federally regulated, which means they’re covered by the Canada Deposit Insurance Corporation (CDIC). Up to $100,000 of each of your deposits is protected under this insurance.

At Cambrian, all deposits are guaranteed without limit by the Deposit Guarantee Corporation of Manitoba. This includes your savings and chequing accounts, GICs, foreign currency deposits, and registered deposits.

Ownership

Banks are partly owned by shareholders—investors who’ve bought shares in the bank. A shareholder may not even have an account with that financial institution.

Credit unions are owned by their members. That’s why when you join a credit union, you buy a one-time share.

Fees

What does it cost you to bank with your current financial institution?

Because a bank must turn a profit for its shareholders every year, banks share their profits with shareholders—not their customers.

One way banks generate profits is by charging their customers service fees.

Credit unions offer patronage programs to reward members for banking with them, like Cambrian’s Unfee, which saves members up to $222 a year in banking fees.

Competitive rates

Looking to borrow money or grow your savings? If so, you’re probably searching for the best interest rates around.

Credit unions are known for offering better rates than banks.

That means you get lower interest rates on loans, mortgages, and lines of credit, and higher interest rates on savings accounts and GICs.

But how can credit unions offer better rates on the same financial product? Again, it comes back to who owns your financial institution.

Credit unions aren’t motivated to make profits for shareholders the way banks are—instead, they give back to members. And one way they do that is by offering better interest rates.

Governance

Because credit unions are member-owned, members have a say in how that credit union is run.

Credit unions have a member-elected Board of Directors that help govern the organization.

At Cambrian, our Board represents our members. The Board leads our organization and helps guide our strategic direction.

Through our Annual General Meeting, members can learn about the financial performance of the credit union, vote on motions, and get to know the Executive Team and Board of Directors.

Cambrian Members can now pre-register for the upcoming virtual AGM, which will take place on April 25 at 7:00 pm.

Do you want to be part of a credit union where you can save on bank fees, benefit from higher investment rates, and have a say as a voting member? Join Cambrian today.

Today’s Rates

*All rates and yields subject to change without notice.
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