How do credit unions work, anyway?
Credit unions are like any other financial institution. They offer financial services online and in person. With a credit union membership, you can deposit money, borrow loans, and invest through both registered and non-registered programs. Profits generated are commonly reinvested back into the credit union and, as a result, can usually provide members with lower rates and fees for financial services. In some cases, profits are even shared directly back to its members!
Banks vs Credit Unions: So, what’s the difference?
Credit unions are well-regulated, financial cooperatives that are guided by the seven cooperative principles:
- Voluntary and Open Membership
- Democratic Member Control
- Member Economic Participation
- Autonomy and Independence
- Education, Training, and Information
- Cooperation among Cooperatives
- Concern for Community
This unique aspect enables credit unions to put their members and the communities they are part of at the forefront. While credit unions do make profit margins, these profits are often set aside to benefit their members directly through distribution back into local communities, profit sharing and donations to local initiatives.
The Benefits of Credit Unions
If you’re looking to start investing in your future, many credit unions often promise better savings rates for their members.
What do Credit Unions offer?
Credit unions are full-service financial institutions that provide a full suite of products and services, including savings and chequing accounts, registered investment products (such as tax-free savings account — TFSA, Registered Retirement Savings Plan — RRSP, and Registered Education Savings Plan — RESP). Credit unions also offer residential and commercial mortgages, business loans and incentive programs, auto loans, and lines of credit, amongst other financial products. It’s important to note that credit unions are well-regulated, and your deposits are always safe and secure!
Canada’s credit unions pride themselves on delivering the best-in-class customer service. For 17 years in a row, credit unions have been awarded the Ipsos Financial Service Excellence Award.
How Credit Unions Make a Positive Impact on Local Communities
As part of our collective mission, credit unions are passionate about furthering positive social and community development. They view social responsibility as the cornerstone of their mission.
The examples below showcase the true measures of impact credit unions have in their communities.
Promoting Financial Literacy: Credit unions across the country have taken initiative in providing financial literacy workshops to their members and local communities. For example, Conexus Financial Literacy workshops have given local Saskatchewan communities free access to resources to help individuals make better financial decisions on spending, credit, identity theft, loans, and homeownership.
Each One, Teach One (EOTO) is an educational innovative program endeavouring to empower individuals to make the best financial decisions for themselves and their families. The program was first initiated by Vancity in BC, and then in 2017 CCUA partnered with the credit union to scale the program nationally. EOTO relies on credit union staff volunteers to promote financial literacy in neighbouring regions. Since 2017, credit unions, across the country, delivered over 1,654 EOTO financial literacy workshops, reaching nearly 23,413 Canadians.
Supporting Homeownership: Assiniboine Credit Union (ACU) embodies the importance of community building through strategic partnerships and collaboration. By supporting the Manitoba Real Estate Association (MREA) and local leaders through the Manitoba Tipi Mitawa (MTM) homeownership program, the ACU was part of a decade of success in providing the community members with a safe place to call home. The ACU partnership with MREA assisted up to 25 First Nations families in buying their first homes and experiencing financial stability through value preservation, financial advice, and literacy. What seemed like an unattainable dream became the reality of many community members.
Providing Access to Funding and Financial Rewards: Credit unions connect closer to members and communities than other financial institutions. This has allowed local and small businesses to benefit from affordable loan rates, grants, or even financial awards.For example, under its community impact initiative, Affinity Credit Union, in a partnership with Saskatoon CarShare Co-operative, has supported affordable transportation for community members.
Many credit unions additionally provide support for local businesses through charitable funding. More recently, the Saskatchewan community benefited from the Conexus Kindness Capital Fund, which rewarded individuals and businesses for showing little bits of kindness. Additionally, Sunshine Coast Credit Union in British Columbia provided access to business grants as a show of support towards businesses affected by the COVID-19 pandemic.
Supporting Career Development and Job Engagement: AMIK, an indigenous job board, has benefited from partnerships with credit unions like Assiniboine Credit Union to provide leading Indigenous workforce engagement and training services. They provide companies with an effective portal to connect to a vibrant Indigenous workforce. This ultimately creates an avenue for the social and economic development of the indigenous community at large.
AgTech & Agribusiness Innovation: Libro Credit Union, which has the largest ag lending portfolio among the credit union sector in Canada, is the founder investor in CVC’s venture capital fund, Emmertech, which focuses on Canadian agtech and agribusiness innovation. The fund was built from an industry-first approach, with investors being some of Canada’s most innovative farmers, agribusiness owners, and agriculturally centred financial institutions including Connect First Credit Union, The Co-operators Group Limited, Gulf and Fraser Fishermen’s Credit Union, Innovation Credit Union, UNI Financial Cooperation, Interior Savings Credit Union, and Libro Credit Union.
Climate Change Initiatives: Vancity credit union has consistently used the tools of finance and community relationships to expand economic opportunity, improve the wellbeing of members, and make communities better for everyone. Vancity has taken bold actions towards a just climate transition. Through Vancity ‘Rethink’ Initiative, the credit union has set ambitious climate commitments, including the commitment to achieve net-zero across all our mortgages and loans by 2040.
Putting You First
Credit unions in Canada are redefining what it means to put members first. As the recent pandemic was growing in threat, credit unions across the country began offering financial relief options to support members through the uncertainties of the pandemic. Various loan payments were made available for deferrals and online, and telephone services were enhanced to help keep members from banking in person. Credit unions also supported local initiatives combatting the effects of the pandemic, and through it all, they still continued to prioritize the financial wellbeing of their members.
If you are looking for a financial institution that does all of the above, supports local markets, works closely with businesses and helps communities thrive, credit unions may be right for you. And while the big banks have global exposure and a larger market share, joining a credit union is a great next step in reaching your financial goals!