What's the Difference Between Banks and Credit Unions?

The main difference between banks and credit unions is ownership. Banks are generally owned by shareholders and operate for profit, while credit unions are owned by their members.

Both can provide chequing accounts, savings accounts, mortgages, loans and other financial services, but their fees, interest rates, branch networks and membership requirements can differ.

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What Is a Bank?

A bank is a financial institution that provides services such as:

• Chequing and savings accounts
• Credit cards
• Mortgages
• Personal loans
• Lines of credit
• Investments
• Business banking

Most major Canadian banks are privately owned companies with shareholders.

Banks can operate nationally and may have large branch and ATM networks.

What Is a Credit Union?

A credit union is a financial cooperative owned by its members.

When you open an account, you may need to purchase a small membership share to become a member.

Credit unions can offer many of the same products as banks, including:

• Chequing accounts
• Savings accounts
• Credit cards
• Mortgages
• Loans
• Lines of credit
• Investments

Some credit unions operate primarily within a particular province or community.

Banks vs. Credit Unions: Key Differences

Ownership

Banks are generally owned by shareholders.

Credit unions are owned by their members.

Members may have voting rights and a say in how the credit union operates.

Profit structure

Banks operate as for-profit businesses.

Credit unions also need to operate sustainably, but profits may be reinvested into the organization or returned to members through better rates, lower fees or other benefits.

Membership

Anyone who meets a bank's account requirements can generally apply to become a customer.

Credit unions may require you to become a member first.

Some also have geographic or community-based membership requirements.

Branch access

Large banks often have extensive branch and ATM networks across Canada.

Credit unions may have fewer physical locations, particularly outside the province or region where they operate.

If you travel frequently or move between provinces, access may be an important consideration.

Fees

Credit unions may offer lower account fees in some cases.

Banks also offer low-fee and no-fee accounts, particularly through digital banking options.

Compare the actual account rather than assuming one type of institution is always cheaper.

Savings rates

Some credit unions offer competitive savings rates because of their member-focused structure.

However, online banks and other financial institutions can also offer strong rates.

Compare the current interest rate, account fees and conditions before choosing.

Loan and mortgage rates

Credit unions can sometimes offer competitive mortgage and loan rates.

They may also take a more personalized approach to lending.

Banks, however, may offer a broader range of borrowing products and promotional rates.

Your actual offer will depend on your income, credit history, debt and the lender's requirements.

Are Credit Unions Safer Than Banks?

Both banks and credit unions can be safe places to keep money, but deposit protection may work differently.

Eligible deposits at federally regulated banks can be protected through the Canada Deposit Insurance Corporation.

Credit union deposits are generally protected through provincial deposit insurance systems.

Coverage limits and eligible products can vary.

Check which deposit insurer protects your institution and how much coverage applies.

Do Credit Unions Have Debit and Credit Cards?

Yes.

Credit unions can provide debit cards for everyday spending and may offer credit cards as well.

You can generally use them for:

• In-store purchases
• Online purchases
• ATM withdrawals
• Recurring payments

The card network and features depend on the institution.

Can You Get a Mortgage From a Credit Union?

Yes.

Credit unions offer mortgages and may compete directly with banks on rates and terms.

They may also provide:

• Fixed-rate mortgages
• Variable-rate mortgages
• Home equity products
• Mortgage refinancing

Compare interest rates, prepayment privileges, penalties and fees before choosing a lender.

Are Credit Unions Better for Bad Credit?

Not necessarily, but some credit unions may take a more personalized approach to lending.

A traditional bank or credit union will still consider factors such as:

• Credit history
• Income
• Existing debt
• Payment history
• Ability to repay

Being a credit union member does not guarantee loan approval.

Do Credit Unions Have Better Customer Service?

Some people prefer credit unions because they are smaller and member-owned, which can result in a more personalized banking experience.

However, service quality varies between individual institutions and branches.

Large banks may offer advantages such as:

• Longer service hours
• More branches
• More advanced mobile banking
• Larger customer support teams

Think about which type of service matters most to you.

Can You Use a Credit Union Across Canada?

It depends on the credit union.

Some operate mainly in one province or region.

You may still be able to use online banking, debit cards and participating ATM networks while travelling elsewhere in Canada.

However, accessing an in-person branch may be more difficult.

Check the institution's network before opening an account if nationwide access is important.

Should You Choose a Bank or Credit Union?

A bank may be a better fit if you prioritize:

• A large branch network
• Nationwide ATM access
• A broad range of financial products
• Advanced digital banking features

A credit union may appeal to you if you prioritize:

• Member ownership
• Personalized service
• Competitive local rates
• Potentially lower fees
• Community involvement

Neither is automatically better.

The best financial institution is the one that provides the services you need at a cost that fits your budget.