Who Deserves Your Money: Bank or Credit Union?

Daniel Steinkey |

Have you ever wondered what the difference is between a bank and a credit union? And is one a better choice for your money? Let’s take a look at some basic differences and where each fares better.


Regulation and Ownership


If you are using one of Canada’s major banks, its regulation falls under federal jurisdiction and is overseen by OSFI (Office of the Superintendent of Financial Institutions). Credit unions generally fall under provincial jurisdiction. Does this matter to you? Not much.


Certain regulations, such as how much of your money is protected in case of bank failure, will change from one to the other. For example, federally, you have $100,000 of bank deposits per institution insured by CDIC. For credit unions, each province has its own insured amount and rules. However, bank failures are rare in Canada, so you will likely never need this insurance.


There can be subtle changes in the banking and lending rules from banks to credit unions, but again, it’s unlikely to be something particularly noticeable or important to you.


Credit unions are run as cooperatives, and profits are funneled back into the credit unions to benefit customers. Banks are for-profit institutions with shareholders, and profits are paid out as shareholder dividends. This doesn’t mean banks don’t also re-invest in themselves for improvements, but there is a philosophy difference that can be noticeable for customers.


Offerings and Fees


Banks and credit unions will generally offer the same basic suite of banking, lending and investment products. When there are differences, the bigger institutions will generally be able to offer you more, such as more credit cards options.


One noticeable area of difference between credit unions and banks can be fees, especially those charged to you for chequing accounts, and the interest paid out for savings accounts. Generally, credit unions do have lower fees and higher interest payouts than banks, which is a plus in the credit union column.


There is variety from bank to bank and credit union to credit union, though. If you want an accurate comparison, pick specific credit unions and banks to see how much difference there is.




The major banks are bigger and have branches and ATMs all over Canada. Credit unions are smaller and may only operate in one province. This means if you are visiting another part of Canada, you may not have a credit union branch you can visit. As we’ve moved more towards automatic banking, that likely isn’t a problem for most of us.


Many credit unions are part of an ATM sharing network, giving you free access to a variety of ATMs across the country. However, the number of bank ATMs still dwarf credit union ATMs. The downside is using the ATM of a major bank that isn’t your own will cost you $2 to $3 in fees each time you do it, so always use an ATM of your own bank when you can. 


All major banks have online access, meaning you can access your accounts anywhere, anytime, if you have an internet connection. They also all staff 24-hour call centres, meaning you can always speak to someone at your bank, if necessary.


Larger credit unions should also have 24-hour phone and online access, but it’s possible some smaller credit unions won’t. If you are shopping around, check with the credit unions you have in mind before making any decisions.


Bottom Line


Is one option better than the other? That depends on you. You will need to look at all your available options to see which bank or credit union best meets your needs. Do your research and ask lots of questions before you make your decision. Remember, whomever you choose needs to earn your business.