When it comes to financial institutions, Canadians have more options than ever. Big traditional banks, online banks and credit unions. Big banks tend to be at the forefront of finances in Canada but that doesn’t necessarily mean that they are always the best option.
This guide on the best credit unions in Canada will fill you in on how credit unions work, the pros and cons, and how to join if you decide that a credit union is the right fit for you and your financial needs.
Top 3 Picks for Best Unions in Canada
There are hundreds of credit unions in Canada ranging in size and location but these three stand out thanks to excellent products, accessibility, action within the local community, and some of the best credit union interest rates in Canada.
1) Vancity (Available in BC)
2) Meridian Credit Union (Ontario)
3) Servus Credit Union (Alberta)
However, these are provincial credit unions. If they are not available where you live then click here to see a larger list of top credit unions in Canada.
What is a Credit Union?
A credit union is a type of financial institution found across Canada. However, unlike a bank, a credit union is a co-op. This means that they are non-profit organizations that are owned by their members. As a non-profit, the main goal of a credit union is to better support their members by providing top-notch products and services rather than to seek a profit.
Any money earned by the credit union is invested back into the credit union. This could mean issued dividends to members or the funds may be donated to the community.
Credit unions offer the same types of financial products that you would find from traditional banks, often at better rates. That being said, their roster of financial products usually lacks the variety that big banks are able to offer.
Credit unions are popular around Canada, especially in smaller, rural communities. In Ontario and Quebec, you will also hear of financial institutions called ‘caisse populaire’ which is the French term for credit union.
The vast majority of credit unions are provincially regulated, although there are two credit unions in Canada that operate at a federal level. These are UNI Financial Cooperation (UNI Coopération financière) and Coast Capital Savings Federal Credit Union.
How do Credit Unions Work?
So, how does a credit union work? How do they make money? And are they safe?
As said above a credit union is a financial institution and provide the same types of services as banks. This means different types of banking accounts including savings and chequing, mortgages, loans, credit cards, and investment opportunities.
Members of credit unions join by purchasing a share. The cost of these shares can be a little as $5 and go up from there. Then, as a shareholder you have access to all their services and are part owner. As both customer and part-owner of the credit union, your voice matters and you have a say in how the credit union operates and a right to speak up and vote on any issues that come to hand.
Credit unions in Canada make money through interest, fees charged, and loans. They typically don’t make as much as traditional banks because one of the goals of a credit union is to have better financial products for their clients, which means lower rates and fees. Plus, as said above, the money goes back into the credit union, is paid out as dividends to the members, or is donated into the community.
Credit unions are, typically, provincially run. They follow specific legislation which dictates how they can run when it comes to lending, borrowing, and investing. In fact, credit unions are just as safe as banks and, like banks, they are protected by the Canada Deposit Insurance Corporation.
Canadian Credit Unions vs. Banks
One of the most notable differences between a credit union and a bank is how the organization is run and who holds responsibility. As previously mentioned, credit unions are non-profit and owned by their members. Banks, on the other hand, are private for-profit corporations and the responsibilities lie with shareholders.
Anyone can apply to a bank in Canada as long as you have the proper identification. However, since credit unions are member-driven, there are certain requirements in place that you need to meet before you can join. Additionally, you will need to buy a share to become a part of the credit union. There is no buy-in fee to become a client at a bank.
Both types of institutions offer an array of financial products. However, traditional banks do tend to have more varied options than credit unions when it comes to things like credit cards or types of accounts. That being said, credit unions prioritize having the best products for their members. Credit union savings rates tend to be higher than what is offered by traditional banks, with lower fees.
As for credit union Canada mortgages, they also tend to have better rates than what you would be offered by a big bank. However, while lower interest rates are great, these mortgage options aren’t always as flexible compared to what the big banks can give you. As with all financial products, you do really need to take the time to compare and see what benefits you the most in the long run.
Another big difference between the two is the level of customer service. Credit unions are known for having excellent customer service since they are member driven.
Again, credit unions want the best for their members. Banks, on the other hand, can be very hit or miss. More often than not, customer service from Canada’s big banks are lacking.
The banking process
As for the actual banking process itself, it’s quite similar. Most credit and unions have physical locations (although keep in mind, online only banks may not). They both have ATM access and cards from both types of financial institutions can be used when shopping in store and online.
The big difference here comes to online banking. Big banks have a bigger budget for their online presence. This means that their online banking platform, apps, and options like virtual chat tend to be much more robust. Big banks, typically, make online banking easier whereas credit unions prioritize the personal touch.
Pros and Cons of Credit Unions in Canada
Credit unions, like everything else, have pros and cons. Here are a few things to take note of when debating whether or not a credit union is right for you.
|Member driven: your voice matters||not as accessible as big banks|
|Lower fees on many financial products||Not as digitally-friendly as big banks|
|Higher interest rates on many financial products||Doesn’t have quite as many banking options as big banks|
|Fantastic customer service|
|Gives back to your local community|
What to Consider Before Choosing a Credit Union
Credit unions have a lot of positive attributes. But, they aren’t for everyone. So, before you decide here are a few things to consider before choosing a credit union.
- Do they have the type of products you want/need?
- Are ATMs or branch locations easy to access for you?
- Is in-person banking important to you? Or would you prefer an easy-to-use website or app to bank from home?
- Is it important to you that your financial interests give back to the community?
10 Biggest Credit Unions in Canada
According to the latest statistics offered by the Canadian Credit Union Associated (CCUA) these are the biggest credit unions across Canada and great places to look if you are comparing the best credit union for savings rates in Canada and the best credit union for mortgages in Canada.
Note that this credit union Canada list does not include credit unions within the province of Quebec.
|1||Vancity||Credit union in British Columbia|
|2||Meridian Credit Union||Credit union in Ontario|
|3||Coast Capital Savings Federal Credit Union||Credit union in British Columbia|
|4||Servus Credit Union||Credit union in Alberta|
|5||First West Credit||Credit union in British Columbia|
|6||Desjardins Ontario Credit Union||Credit union in Ontario|
|7||Steinbach Credit Union||Credit union in Manitoba|
|8||Alterna Savings Credit Union||Credit union in Ontario|
|9||Affinity Credit Union||Credit union in Saskatchewan|
|10||Prospera Credit Union||Credit union in British Columbia|
You can find the full list of credit unions in Canada here.
Vancity offers financial products for individuals and businesses alike. This includes typical products like savings and checking accounts and credit cards (8 options).
They offer all socially responsible investment options and have interest-free micro-loans in place for do-good type situations ie: for individuals updating their homes to host refugees. Thirty percent of Vancity’s net income goes back into the community every year.
Meridian Credit Union
Meridian credit union serves members across 89 branches in Ontario offering an array of financial products. Notable financial products include credit card and investment options.
Meridian offers six credit cards including a USD one and multiple investment options includes term deposits, mutual funds, and direct investing in partnership with Qtrade. Meridian supports more than 400 community organizations across Ontario.
Capital Coast Savings Credit Union
Capital Coast Savings credit union is a bit more spread out across BC but otherwise has many similarities to Vancity in terms of products on offer for both individuals and businesses. The standout here is the no-fee chequing account with no minimum balance requirement. Capital Coast provides support to the local community with 10% of their net profits.
Servus Credit Union
With over 100 branches across the province, Servus is the largest credit union in Alberta and, like the others on this list, offers individual and business financial products. They also have a zero-fee account option for young Canadians ages 17-25, a no-fee option for seniors (members aged 60+), and USD account options. Servus currently partners with and supports 13 different community organizations within the province.
First West Credit
First West Credit is made up of four divisions that all offer similar financial products. Stand-out products include their no-fee chequing account with no minimum balance requirement. These accounts also include free, and unlimited e-transfers.
Socially responsible investment options and a range of credit cards including USD cards and travel cards are also available. Since 2010, First West has donated more than $32.7 million into the local community.
Canadian Credit Unions – FAQ
Credit unions in Canada are just as legitimate and safe as the big banks. Many Canadians, especially those in smaller communities or in specific professions, are a great fit for credit unions. So, keep what you’ve learned in this credit union guide in mind when deciding if a credit union is right for you.
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