A brief discussion on Banks vs Credit unions.
1) Typical higher monthly account fees, e.g. $5-$10 for basic chequing account. There are difference types of accounts are offered by banks, chequing accounts are common, also bank changes fees for issuing cheques.
2) Banks do not typically give interests, if if they do they give pretty low, e.g. .01% to .05% which is almost nill. On high savings account interest rate is typically in range of .50% which is also not very much.
3) Bank Credit cards have typically have high interest rates, e.g. 19-20%. Be Careful with credit cards! Choose credit card with lower interest, credit card is a much to build credit history in Canada which later on helps to get mortgage etc.
4) Bank’s motive is to generate profit for shareholders, and not for consumers. Bank can never be friends to consumers!
5) Deposits are insured typically upto $100K in banks.
1) Credit unions offer very low or almost zero accountant maintenance fees. Typically All transactions are free including cheques.
2) Consumer is a member of credit union. Credit unions typically give better interest rates on deposits than bank, e.g. 1.5%.
3) Credit cards VISA/MASTERDARD offered by credit unions have similar interest rates as banks, e.g. 19-21%. Although some credit unions offer lower interest rate to their member to help them improve their credit ratings if they have debt.
4) Credit unions – every customer is a member, they offer better customer service. For example whenever I call to my credit union within 5 minutes I get response then to bank where person keep on waiting for hours. Credit unions are simply better for people.
5) All deposits are insured up to $250K in Ontario, Canada. In British Columbia (Canada) deposits are insured in full!! which means in case of bankruptcy customers will get they full deposit in credit union in BC (e.g. vancity) than bank. Credit unions clearly better than any bank.
These are some of major differences, typically credit unions are better if you are someone who does not like to pay monthly maintenance fee and like to have higher interest on your deposits.
On the other side there are certain advantages with larger banks which may not be with credit unions as convenience banking almost anywhere in country, more open to give loan at lower interest when someone is in good financial situation, please note good financial health or in other words bank like happy times. Banks are good for commercial loans etc. Not all points are bad with Banks. However one need to check their requirements before making a decision.
Let’s talk about business banking. In my experience Bank’s are a better choice when it comes to business banking. Often business enterprises need loan, credit line to grow and their big banks may help depending on credit ratings and other factors. It is very hard to get business loan with credit unions.
Let’s talk about foreign currency. Bank’s typically offer rates as compared to credit unions. Also, for larger transactions banks may waive off transaction charges.
Please leave your thoughts below in comment section, your comments may be helpful to may others for making a decision as where to bank.
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