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April 26 – The difference between banks and credit unions

Are you foggy on how credit unions and banks differ? Here are some important distinctions:

  • Banks are corporations owned by shareholders. Credit unions, on the other hand, are owned by their members and operate on a cooperative business model. This co-operative principle means that credit unions remain accountable to their all of their members, not just the well-heeled ones.
  • Credit unions don’t have shareholders demanding a dividend each quarter but instead invest in their local communities. At Coast Capital, for example, we invest 7% of our pre-tax profits towards local, worthwhile community causes. Since 2000, that adds up to more than $60 million!
  • Most credit unions tend to be driven by member service and have a local or provincial focus, while the five biggest banks in Canada have a national presence.
  • A key principle of credit unions is that each member, regardless of how much money they have with the credit union, is entitled to an equal say in its governance. Not only does every member have an equal vote when directors are elected each year, any eligible member can run to be a director themselves.
  • We’re answerable instead to each and every one of our members, and their financial well-being is our top priority.

Looking for more helpful information? Check out past segments