Canadian Credit Unions as Member-Focused Institutions
A credit union is a form of cooperative that offers a range of services to members, including mortgages, loans, insurance policies, and other services and products.
Services Offered
Unions offer different financial services such as wire transfer, payroll deduction, and overdraft protection. They provide other branch and automated services like funds transfer, direct deposit, tax preparation, savings bonds, and others. Many financial institutions also provide online services such as loan advances, tax services, and monthly statements. In addition to standard solutions, members are offered rewards programs and perks such as free ATM withdrawals, attractive rates on mortgage loans, and free traveler's checks. Members also earn points that allow them to get reduced interest rates, discounts, and other perks. Unions also offer debit and credit cards as well as gift cards and health savings accounts.
Functions
Basically, credit unions offer the same services as banks and all deposits are insured. This means that customers' money is safe. Unions function as non-profit cooperatives that distribute surplus reserves among members. Money is distributed in the form of attractive rates on savings accounts, low interest rates on borrowing solutions, and low cost or free services. The functions are also determined by their unique ownership structure. This is a financial institution that is controlled, owned, and operated by its members. The size of the entity and whether it has local branches and offices also determines the functions and scope of services. Some analysts describe them as a pure form cooperative.
Top Canadian Credit Unions
There are many establishments in Canada, among which First Calgary Financial, Steinbach, First West, Coast Capital, and Vancity. Vancity, for example, serves members in Vancouver and Victoria and offers the full range of financial services, including loans, mortgages, and deposit accounts. The union provides services to business and individual customers, along with grants and payment services. Coast Capital Savings has more than 500,000 members and is based in Surrey, BC. It offers the full array of services, among which checking and savings accounts, mutual funds, tax-free savings accounts, term deposit products, and others. Servus Credit Union is one of the largest entities in terms of membership base and assets. It offers cash management, investment, and borrowing solutions to business and individual customers. Meridian is another financial institution that serves more than 262,000 members and features wealth management, commercial banking, business loans, community sponsorships, and other services. First West is also an institution with a large customer base and comprehensive selection of financial products and services. Conexus is the 6th largest in Canada and offers wealth management, borrowing, and banking solutions. Among the products offered are TFSAs, RRSPs, investment planning, and more.
Banks vs. Unions
The main difference between the two types of establishments is that banks offer loans, mortgages, and other borrowing solutions to create profits. To do so, they accept deposits and use the funds to offer them in the form of loans. Banks are owned by investors. Because they are non-profit entities, unions work to serve their members. Both institutions have pros and cons. Big banks, for example, have hundreds of branches and a large network of ATMs which makes them more accessible. They offer more products and services, featuring a wider array of investment and borrowing solutions. The main downside is that they have rigid criteria and standards, and the application process may take several weeks. Credit unions also offer advantages, and one is their superior and more personalized customer service. They also offer higher rates of return on deposits and low interest rates on mortgages and other loan products. The reason is that these entities are member-focused and have more lenient eligibility criteria. One drawback is that unions often impose restrictions on membership, including geographic and other limitations. There are community, group, employer, federal, and regional unions. Group-based entities include advocacy, non-profit, and alumni organizations. Other institutions serve members in a certain area or town, and residency is an important requirement. Those who don't belong to a certain group are not eligible. Another downside is that most financial institutions have fewer ATMs, offices, and local branches compared to banks.