Canada’s Difference Between a Bank and a Credit Union

Canada's Difference Between a Bank and a Credit Union

You will at some point require particular financial services, regardless of who you are or what you do. In that case, it is absolutely necessary for you to have a reliable financial institution on which to rely. Canada has two major financial institutions: Credit unions and banks As a result, you will need to be aware of the distinctions that exist between credit unions and banks in Canada in order for you to select the one that best meets your requirements.

Despite having a number of similarities, these institutions are primarily distinct, making them easy to misunderstand. As a result, the purpose of this article is to educate you and assist you in comprehending the components and operations of these other institutions. You’ll have a better understanding of the topic thanks to this.

In Canada, both credit unions and banks are under the supervision of the Office of the Superintendent of Financial Institutions (OSFI).

What are banks?
A bank is a financial institution that is properly licensed and authorized to provide financial services like; services for deposits and withdrawals, taking out loans, managing one’s wealth, exchanging currencies, etc.

Like anywhere else, banks in Canada provide a variety of services based on the policies they adhere to. The primary business banks, on the other hand, take deposits from people who have the money and use the money for other purposes, like lending.

Types of Banks in Canada
The various types of banks in Canada include: However, based on the additional services they provide, Canada has only five major banking institutions. They fall into the following categories:

The Cooperative Credit Movement
Insurance Companies
Securities Dealers
Chartered banks
Trust and Loans companies
The Top 5 Canadian Banks
There are a plethora of banks and other financial institutions in Canada. This is how banks in Canada have dominated the financial industry. However, in terms of prestige, reputation, age, and other factors, some banks are superior to others. The Big Five banks are these. The following are a list of them:

Bank of Nova Scotia,
Canadian Imperial Bank of Commerce (CIBC),
Royal Bank of Canada (RBC),
Bank of Montreal (BMO),
and TD Canada Trust

What exactly are credit unions?
Similar to a bank, a credit union is a financial institution. In contrast to commercial banks, credit unions are nonprofit organizations controlled by their members. As a result, rather than making more money, they run their businesses by providing better services to their clients.

The national credit union organization in Canada is the Canadian Credit Union Association (CCUA). Since Alphonse Desjardins helped establish the people’s bank (caisses populaires) in Quebec in the early 20th century, there have been approximately 700 credit unions and caisses populaires in Canada.

The majority of credit unions are run by provinces and are members of the CCUA. In Quebec, they have the most members and are more popular. They adhere to provincial regulations regarding how to invest, borrow, lend, etc. because they are run by provincial governments.

The OSFI has prohibited credit unions from referring to their activities as “banking” in order to distinguish them from one another.

Top 10 Canadian Credit Unions Like banks,

Canada has many Credit Unions. People who want to do business with them can choose from a variety of options because of this. We have only included the ten most well-known credit unions in Canada in the list below.

Coast Capital Investment funds Credit Association
Meridian Credit Association
Servus Credit Association
Conexus Credit Association
First West Credit Association
Desjardins Ontario Credit Association
Steinbach Credit Association
Prospera Credit Association
Alterna Investment funds and Credit Association

Banks and Credit Associations in Canada
As currently settled, banks and credit associations are practically the same in activity and design. But there are some differences between them that need to be fixed.

Consequently, we must compare these institutions. In order to comprehend the similarities and differences between Canadian credit unions and banks, we will compare them across various categories.


 Services :Under similar regulations, the majority of the services credit unions provide are comparable to banking services. Some examples of these services are: Savings and checking accounts, loans, mortgages, mobile banking, deposit and withdrawal accounts, and so on. All of these services are available at credit unions and banks alike.
Security: Because they are both financial institutions, banks and credit unions place a high value on security. However, credit unions are protected by the National Credit Union Administration (NCUSIF), whereas banks are protected by the Federal Deposit Insurance Corporation (FDIC). Additionally, there are numerous federal and provincial policies in place to regulate these businesses and safeguard customer funds.
Cards: Card services are available from banks and credit unions alike. Customers can access funds wherever they go thanks to the ATM services they provide.


Ownership: Banks are businesses focused on making money. Shareholders control them and make decisions to maximize ROI (Return on Investment). They deal with whoever the law allows them to. However, credit unions prioritize customer satisfaction. Customers who are referred to as “members” own and run them.
Rates of interest: You want to repay financial institutions’ loans with low or no interest when you take them out. However, you will be required to repay with interest because the institutions require some form of incentive to continue functioning. With similar agreement terms, credit unions typically have lower interest rates than banks. However, this is not the case when it comes to deposits. While credit unions have higher interest rates, banks have much lower rates.
Insurance: As previously stated, credit unions and banks adhere to similar financial security regulations. In the event of unforeseen circumstances, they guarantee the funds of customers. Credit unions use the National Credit Union Administration (NCUSIF), whereas federally chartered banks use the Federal Deposit Insurance Corporation (FDIC) to protect the funds of their members.
Location: As previously mentioned, provincial governments run credit unions. This indicates that they are typically restricted to their approved provinces; Consequently, they lack many branches. On the other hand, banks have locations all over Canada. If you move away from the province in which a credit union you belong to is chartered, you may need assistance locating their business-related branches.
Goals: Credit unions are not driven by profit. They only want to focus on providing services that are more focused on the needs of the customer while putting the small profit back into the business. However, the stockholder board of banks has a profitable business model and makes decisions based on profit.
In Canada, how do I join a credit union?
First of all, like joining a Canadian bank, you must agree to certain terms before you are eligible. Additionally, because they are primarily run by provincial governments, you may be required to reside, work, or attend school in that province.

However, you can join federal-incorporated credit unions from any location in Canada. Additionally, you should be aware of the type of credit union you are joining because some credit unions are geared toward particular occupations.

Consequently, the following are some general requirements for joining a credit union:

Provide proof of identity, such as a national passport or other forms of identification.
Depending on the type of credit union, make sure you are the minimum age that is considered acceptable in your province or Canada.
Have not filed for bankruptcy in at least seven years. Be willing to purchase capital shares in the credit union for between $5 and $25.
Choosing a Financial Institution There are a lot of things to think about when deciding whether to use a credit union or a bank. Therefore, you must conduct research rather than simply following the standard characteristics of Canadian banks and credit unions.

Better customer service, lower fees, almost no taxes, and higher interest rates on deposits are all features of credit unions. However, banks have a better self-service experience, more branches, and a more extensive network.

Make the best decision by determining which of these best suits your requirements.

Most Commonly Asked Questions

 #1In Canada, who can join a credit union?
If you meet the necessary requirements, such as identity documents, age, financial history, residence province, etc., credit unions are open to everyone. There are rarely any additional requirements that are union-specific. However, you will need to meet them before joining if there are any.

#2. What does it imply to be a Federally Chartered Credit Union?
Canadian credit unions with a charter issued by the Federal Government are known as “federally-chartered.” These are governed by NCUA.

#3. Why are Canadian credit union interest rates higher than those of banks?
In contrast to Canadian banks, credit unions prioritize covering operating expenses over profit. As a result, they are able to offer better interest rates to their clients.


In conclusion, Canadian banks and credit unions are excellent financial institutions. However, whereas banks offer a broader range of services (i.e., more financial products), credit unions offer a greater variety of personal services. In the end, it all comes down to the services you need and what works best for you.


  1. Faluyi Gabriel Oluwaseyi

    This is absolutely amazing

  2. Valentine Chukwuemerie


  3. Valentine Chukwuemerie


  4. Valentine Chukwuemerie


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