At present, over 1600 credit unions operate in Canada, catering to the banking needs of over 10 million citizens. Canadians rate the services of their credit unions very highly. From their not-for-profit structure to their community-centric approach, credit unions present a compelling choice for individuals seeking a personalized and supportive banking experience.

In this post, we’ll dive into some key benefits of credit unions, including better rates, member-focused services, and their commitment to community development. Read on.

How Do Credit Unions Work?

Credit unions in Canada are non-profit financial institutions that offer banking services to their members. These services include chequing and savings accounts, credit cards, low-interest loans, ATM access, and more.

The members of these unions aren’t just their customers but owners too. This gives them a say in how the union operates. Additionally, credit unions reinvest their profit into the business and distribute it among the members.

They operate at a much smaller scale than commercial banks, typically ranging in size from a few hundred to many thousands of members. Their primary focus is on supporting local communities across Canada by providing affordable banking and doing charity.

What are Some Unique Benefits of Canadian Credit Unions?

Here are 10 benefits of banking with credit unions in Canada:

1. Ownership of Credit Union

When a person joins a credit union in Canada, they also become its part-owner, giving them control over the union’s workings. For instance, they can vote to elect the board of directors, influence decisions regarding the financial services, etc. They also receive their share in the profit in the form of dividends.

2. Personalized Financial Services

Most unions have a few hundred to a few thousand members, which is quite less compared to a commercial bank’s customer base. Moreover, unlike banks, they don’t operate with a profit motive. Therefore, unions are able to prioritize the financial well-being of members by offering them services with a personal touch.

Due to their people-first approach to banking, Canadians have voted credit unions as winners in the Customer Service Excellence category of the IPSOS Financial Service Excellence Awards for 19 years in a row.

3. Digitalized Banking

By banking with credit unions, Canadians don’t miss out on the convenience offered by traditional banks. Unions let members apply for bank accounts online and support internet and mobile banking.

The use of specialized credit union software is also prevalent in the industry. Unions leverage loan origination platforms and digital lending software to automate loan application and approval, improving credit availability for their members.

4. Free Access to Wide ATM Network

Banks charge customers when they use competing bank’s ATMs. However, credit unions provide a surcharge-free ATM service regardless of the network used. Most credit unions in the country are part of THE EXCHANGE Network, which operates pan-Canada, giving union members unrestricted access to ATMs.

5. Affordable Banking Services

Credit unions offer the convenience of digitalized banking and free ATMs without huge costs for members. As mentioned earlier, unions reinvest their profits into the organization. They pass on this profit to members in the form of low charges, be it application fees, loan processing fees, service charges, etc.

6. Better Interest Rates

Credit unions prioritize their members’ financial well-being by offering them more favourable interest rates compared to traditional banks. Members benefit from higher interest rates on their deposits, which facilitates the growth of their financial assets over time.

Additionally, the interest rates on loans are typically lower at credit unions. This, combined with reduced processing fees, makes obtaining loans more affordable for members.

7. Democratized Loan Eligibility Criteria

Besides lower interest on loans, credit unions also provide more accessible lending options to their members through more flexible eligibility criteria. They are known for accommodating individuals who might not meet the stringent requirements of traditional banks, such as those with lower credit scores, irregular income, or non-traditional employment.

8. Deposit Insurance

Most credit unions in Canada are regulated by provincial laws and each province in the country has a $100,000 minimum deposit insurance. What this means is that any money members deposit remains safe even if the credit union goes out of business.

9. Support for Community

Credit unions’ primary objective is to strengthen the communities they serve. They do so by donating a part of their profit to the community, providing scholarships, offering sponsorships, and doing volunteer work. In 2021, Canada’s credit unions donated over $40 million in charity, while their employees volunteered for more than 77,694 hours.

10. Support for Local Businesses

Credit unions also have a great track record of supporting local businesses. These unions currently provide affordable loans to around 350,000 small and medium businesses in the country. Furthermore, Canadian Federation of Independent Business revealed that businesses consider the services they receive from credit unions better than those of the country’s five largest banks.

Wrapping Up

Credit unions in Canada operate to strengthen the communities they serve. Therefore, they provide affordable banking services, free access to ATMs, and easier access to credit to their members. These benefits are essential to make their members financially resilient and foster community development.

To help credit unions cater to the growing expectations, Intellect Canada offers a wide range of cloud based Software as a Service banking platforms that has been designed for connected ecosystems. The future-focussed and open banking-enabled solution allows credit unions to partner with fintechs and rapidly launch innovative products that drives revenue, creates operational efficiencies and provides an opportunity to attract new, younger members.