Are credit unions better than banks in Canada?
Banks tend to offer more options for chequing accounts thanks to their sheer size and capacity, but you'll likely find better fees and rates for both chequing and savings accounts at credit unions.
Credit unions are regulated & deposits are protected.
Credit unions go beyond standard banking, offering lower fees on loans, higher dividend rates on accounts, and more personalized member benefits. Unlike for-profit banks focused on maximizing shareholder profits, credit unions are member-owned, non-profit financial institutions.
Statistically, personal savings accounts from Credit Unions fare better than accounts in major banks. Grow your money faster with a Value+ Money Market account, or a share certificate.
One question that often arises is, "Are Credit Unions Safer than Banks?" If you're looking for a short answer, you'll be happy to know that we're not making you read the whole post: Credit Unions and banks are roughly identical in safety because deposits at both are insured by the Federal government to $250,000.
The Financial Services Regulatory Authority of Ontario (FSRA) provides insurance coverage for your member's deposits, in the unlikely event that your credit union fails. Members qualify for up to $250,000 worth of coverage for their non-registered accounts and unlimited coverage for their registered accounts.
Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
Through “right of offset,” the government allows banks and credit unions to access the savings of their account holders under certain circumstances. This is allowed when the consumer misses a debt payment owed to that same financial institution.
| Financial Institution | Why We Picked It |
|---|---|
| Blue Federal Credit Union | Best Overall |
| Liberty Federal Credit Union | Best for Checking |
| Alliant Credit Union | Best for a Savings Account |
| Service Credit Union | Best for Military Individuals & Families |
Switching from a bank to a credit union can save you money and give you peace of mind knowing you have a trustworthy banking partner that puts your interests above those of outside shareholders.
Are credit unions safer than banks during a recession?
bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.
Credit unions are federally insured by the National Credit Union Share Insurance Fund (NCUSIF), which is backed by the full faith and credit of the U.S. government. The bank equivalent is the (more widely known) Federal Deposit Insurance Corporation (FDIC).
In particular, having more than one bank account can provide you with extra protection for your funds if you have more than the $100,000 CDIC insurance limit. Splitting your funds between banks can also give you access to extra features and benefits that you don't have at your current financial institution.
- RBC. Unsurprisingly, Canada's Big 5 Banks take the top spots for most reputable banks. ...
- TD Bank. TD Bank is the second most reputable bank on the list, with a reputation score of 35. ...
- Bank of Montreal (BMO) ...
- CIBC. ...
- Scotiabank. ...
- President's Choice Financial. ...
- Tangerine. ...
- National Bank of Canada.
Deposit insurance protects your savings if your financial institution fails. You don't have to apply or pay for deposit insurance. The Canada Deposit Insurance Corporation (CDIC) automatically insures your eligible deposits. This applies to deposits held at CDIC member institutions in Canada.
FDIC. Both the NCUA and FDIC are responsible for insuring funds in the event that a financial institution fails. The NCUA insures credit union accounts, while the FDIC provides insurance for bank accounts.
In addition, credit unions tend to take lower risks compared to banks. They maintain conservative lending practices and focus on member services rather than profit. Because they are not driven by the same profit motives, they may be less exposed to risky financial behaviors that can lead to instability.
For decades, bankers have objected to the tax breaks and sponsor subsidies enjoyed by credit unions and not available to banks. Because such challenges haven't slowed down the growth of credit unions, banks continue to look for other reasons to allege unfair competition.
If your bank fails, CDIC will contact you regarding the payout procedure. Visit the CDIC web site for a list of current CDIC members. A separate deposit-insurance corporation in each province protects investors' money if a credit union, caisse populaire or provincially regulated trust or loan company fails.
And your money is just as safe—if not safer. All provinces in Canada have deposit guarantees for provincial credit union members that are equal to—or in some cases higher than—the big banks.
How much money is guaranteed in a bank account in Canada?
Protecting Your Deposits
CDIC is a federal crown corporation – a part of the government of Canada – created by Parliament in 1967 to protect money on deposit in the event a member institution becomes insolvent. CDIC protects eligible deposits to a maximum of $100,000 per depositor and per insured category.
Weaknesses of Credit Unions
Membership is restricted. The membership of a credit union is restricted to a specific community, most often a religion, profession, or geographic location. For a member to be eligible to join a credit union, they must belong to a group listed in the credit union's charter.
You'll save more money.
Instead of paying shareholders a portion of the profit generated, credit unions return their profits to their member-owners in the form of better dividends on savings, lower interest rates on loans, interest-earning checking and fewer fees.
The largest credit unions in the U.S. include Navy Federal, State Employees', PenFed, Boeing Employees', SchoolsFirst, Golden 1, America First and Alliant.
What Accounts Can the IRS Not Touch? Any bank accounts that are under the taxpayer's name can be levied by the IRS. This includes institutional accounts, corporate and business accounts, and individual accounts. Accounts that are not under the taxpayer's name cannot be used by the IRS in a levy.
