Are credit unions really different from big banks? (Views: 3699)
Thu, 19 Sep 2013
Canada has North America’s highest per capita membership in credit unions. This fact makes credit unions an important financial service provider for Canadian small business owners. As an entrepreneur, you could therefore benefit from understanding what credit unions are, what distinguishes them from banks and how they can help your business.
Credit unions in Canada
The first Canadian credit union (or “caisse populaire”) was founded in 1900 by Alphonse Desjardins to provide ordinary citizens with fair-rate banking services. Credit unions then spread outside Quebec, spearheaded by the Credit Union Central of Canada (CUCC). In 2012, CUCC credit unions disclosed assets of $151 Billion and the Caisses Populaires Desjardins disclosed assets of $196.7 Billion, making Desjardins’ legacy the 6th largest financial institution in Canada.
Credit unions offerings
Credit unions branches are independently and locally owned, and are guided by the seven cooperative principles. Amongst the seven, these principles state that credit unions are under “democratic member control” which means members hold equal voting rights and can elect the board of directors. Their motivation is that by being member oriented they can afford to make smaller profits and offer better support to their members by means of dividends and reduced service fees. This community perspective also translates to community grants and donations and provides credit unions with incentives to offer localized funding solutions.
Credit unions drawbacks
Banking mobility can be an issue with credit unions. Because branches are independently and locally owned, funding program availability and rates might not be the same from one branch to another or your file might not be accessible. You might also often find yourself paying fees for using out-of-network ATMs. Fortunately shared branching, online banking solutions as well as ATM fee refunds, pretty much counter these drawbacks. Finally, while dividends are enticing and some people swear by them, they are not guaranteed and should be weighted against other criteria such as loan interest rate and payment flexibility when choosing a financial institution.
Credit unions and your business
Credit unions provide more and more business banking services that compete with big bank solutions. From commercial and agricultural loans and mortgages to rural entrepreneur assistance, credit unions are a great place to look for a business loan. Unfortunately, variability in funding rates and availability make it impossible to recommend funding programs valid across Canada but comparing both credit union and bank offerings should already be part of your funding identification strategy and the Find Funding tool will make identification a breeze. As far as whether or not credit unions are really different from big banks: we would love to hear from your experience.
Credit unions in Canada
The first Canadian credit union (or “caisse populaire”) was founded in 1900 by Alphonse Desjardins to provide ordinary citizens with fair-rate banking services. Credit unions then spread outside Quebec, spearheaded by the Credit Union Central of Canada (CUCC). In 2012, CUCC credit unions disclosed assets of $151 Billion and the Caisses Populaires Desjardins disclosed assets of $196.7 Billion, making Desjardins’ legacy the 6th largest financial institution in Canada.
Credit unions offerings
Credit unions branches are independently and locally owned, and are guided by the seven cooperative principles. Amongst the seven, these principles state that credit unions are under “democratic member control” which means members hold equal voting rights and can elect the board of directors. Their motivation is that by being member oriented they can afford to make smaller profits and offer better support to their members by means of dividends and reduced service fees. This community perspective also translates to community grants and donations and provides credit unions with incentives to offer localized funding solutions.
Credit unions drawbacks
Banking mobility can be an issue with credit unions. Because branches are independently and locally owned, funding program availability and rates might not be the same from one branch to another or your file might not be accessible. You might also often find yourself paying fees for using out-of-network ATMs. Fortunately shared branching, online banking solutions as well as ATM fee refunds, pretty much counter these drawbacks. Finally, while dividends are enticing and some people swear by them, they are not guaranteed and should be weighted against other criteria such as loan interest rate and payment flexibility when choosing a financial institution.
Credit unions and your business
Credit unions provide more and more business banking services that compete with big bank solutions. From commercial and agricultural loans and mortgages to rural entrepreneur assistance, credit unions are a great place to look for a business loan. Unfortunately, variability in funding rates and availability make it impossible to recommend funding programs valid across Canada but comparing both credit union and bank offerings should already be part of your funding identification strategy and the Find Funding tool will make identification a breeze. As far as whether or not credit unions are really different from big banks: we would love to hear from your experience.
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