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Credit unions are similar to commercial banks because they offer chips and savings accounts, mortgages, commercial loans, online banking and registered savings plans – all fees are lower or no fees than traditional lenders. But credit unions are cooperatives and are therefore often much smaller than major banks.
Wendy Brookhouse, a certified financial planner and CEO at Black Star Wealth, said customers must purchase a membership share to start.
“Come in and say, ‘I want to be a member and pay your membership share,'” she said. “You’re in the warehouse there now.”
Brookhouse said that as a nonprofit, credit unions are often community-oriented. This makes them perfect for socially conscious people who want their money to stay in their community.
“Their overall goal is to use the money to provide better services to customers, invest in the community, or invest in better interest rates or better customers,” Brookhouse said.
Credit unions have also become an attractive alternative to traditional banks for many cost-conscious Canadians, said Natasha Macmillan, director of daily banking at RateHub.ca.
“People are looking for diversity,” she said.
Macmillan said many want to minimize their bank fees, higher interest rates for savings, and lower interest rates for loans.
“As people feel the cost of living increases and things like that, they do want to get the best explosion of their own dollars.”
She said she saw more Canadians trying to leave large banks that may require a minimum amount of money to stagnate in chip accounts to abandon bank fees or charge up to $30 a month. Most credit unions have significantly reduced costs.
“People are increasingly aware of the options there, so we hear anecdotely that people are switching to some of these credit unions,” she added.
Credit unions are managed at the provincial level and are geographically focused and are popular in Quebec, British Columbia and Alberta, where there are some large regional players. Desjardins is by far the largest, but Vancity, Servus and Meridian have tens of thousands of memberships. Others, such as those who start in labor groups or religious and cultural communities, are smaller.
They also do not stipulate the norms of Canadian commercial banks under the Banking Act. Instead, each province stipulates deposit insurance coverage for credit unions similar to Canadian deposit insurance companies in order to prevent credit unions from closure and protect consumer deposits. According to the Canadian Association of Credit Unions, its members have provincial deposit insurance equal to or higher than that of large banks.
Despite potential savings and other benefits, experts say some Canadians may hesitate due to lack of convenience.
Macmillan said credit unions usually have limited branch networks, which can cause inconvenience. Members can also withdraw ATM withdrawals if they do not use ATMs in their credit union network.
She added that investment options for its wealth management services are also limited compared to full-service banks.
Macmillan said it might not be a bad idea to have multiple bank accounts, including a credit union.
“It’s really not about focusing on putting all the money into one bank, but about really looking at what the purpose is and why the switch is to switch,” she said.
Cindy Marques, a certified financial planner, said some credit unions may also require members to meet eligibility criteria, such as workers in a religious or ethnic community, a specific industry or student to establish an account.
“Not everyone will meet the eligibility criteria for credit union members,” she said in an email. Digital banking also makes the space more competitive and offers better deals for customers.
“I don’t necessarily think that credit unions are the best solution for many Canadians looking for choice,” Max said.
Brookhouse said choosing to go to a bank with a credit union depends on personal preference.
Brookhouse, for example, says she might advise her clients to consider a credit union if your credit union borrows 100% of the mortgage.
Credit unions are also suitable for those who have daily banking needs such as deposits, paying bills and savings to work well. She said that if the client had to conduct foreign transactions, it might not work properly.
Before converting a lender, Brookhouse said it is important to understand what network the credit union is and how it can affect the flow of your money.
“If I were to make an interactive transfer to someone, how much does it cost to a credit union and a bank? How many days did it take? Or instantaneous?” she said.
“Sometimes it just understands it and then you adapt to it’s a deal breaker?” Brookhouse said.
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Last modified: August 26, 2025
