Credit Unions > Banks ?

December 14, 2010 11:45 AM

Why do so few people use credit unions in Ontario, compared to Quebec and out West? They seem better than banks both ethically and financially (fewer fees, better interest). Is there any reason not to switch?

Right now I have an account with the Big Five, but soon I will be graduating university and earning a salary. I try to be ethical with where I spend my money, so a not-for-profit is ideal when given the choice. The only drawback I can see is that credit unions operate provincially/regionally, which is a hassle if you move (but that is about to change).

The one I'm considering is Meridian Credit Union. Have you experience with them? Is there something I'm missing? Cheers.

posted by wo to Work & Money (17 answers total)

Yup, availability of banks and ATMs is probably the biggest reason.
posted by Night_owl at 11:49 AM on December 14, 2010

Best answer: General availability issues, I think -- historically, credit unions have been tied in with individual groups, like unions or employers and there isn't a big generally available chain of them like Desjardins or VanCity. For example, I could have joined a credit union while I was at IBM, but then, when I quit, I would have had to disentangle my finances as well as my professional life and my social life from them. That may, as much as anything else, because the big 5 banks have Toronto locked down with a branch on every street corner, so there wasn't a huge perceived need for them.

Meridian, however, holds the capped rate approval on my future mortgage, and I've been very, very pleased with the service I've had from them so far, including the call I got last week to let me know that they were lowering my guaranteed interest rate. I also held a capped rate approval from Bank of Montreal, who showed no sign of even caring when it expired before I used it because my building wasn't complete yet.

My plan is to move the majority of my banking to Meridian at the same time as I move (since I'll want to change bank branches at that point anyway) and get the mortgage finalized.
posted by jacquilynne at 12:01 PM on December 14, 2010

Yup, availability of banks and ATMs is probably the biggest reason.

Just to clarify, this would mean availability of banks and ATMs in Ontario where one doesn't have to pay an access fee to get money and are able to deposit money in ATMs?
posted by sleslie at 12:10 PM on December 14, 2010

Generally, too, at least in the US, many credit unions are somewhat more old-fashioned. True, my sister knows the bank people at her tiny student credit union by name, but their website doesn't have bill pay. My mega-corporation bank does. Her credit union limits the number of online transfers she can make between her accounts each month, whereas my mega-bank lets me do it until I'm blue in the face and from my smartphone, too.

Also, I know people who run into a lot of problems buying currency from their tiny credit union for overseas trips when going someplace even slightly off the beaten path (see: New Zealand). My mega-bank not only has every currency under the sun with turnaround in three business days or less, they actually have a flavor of free checking where you can withdraw money overseas without the usual bank costs.

This, of course, doesn't make them any less bastard-y as a corporate citizen. Just very, very convenient.
posted by joyceanmachine at 12:14 PM on December 14, 2010

In the Prairies, credit unions popped up in the '20s and '30s alongside similar organizations like wholesale co-ops, the Wheat Pool, and the CCF. With the exception of the CCF (now the NDP), all have remained, in some form or another, just a part of everyday life in the rural west.
posted by Sys Rq at 12:24 PM on December 14, 2010

Response by poster: sleslie: Yeah, most credit unions are part of the Exchange Network, which is a fee-free network of ATMs (e.g. you can withdraw from another credit union's ATM without paying a fee). The Big Five run on the Interac network, and you are charged ~$1.50 if you withdraw from an Interac ATM not run by your bank. From my understanding, if you belong to a credit union and you use a bank's ATM, you have to pay the bank's fee plus the Interac fee ($3 total or so?). The exchange network only has 2400 ATMs while Interac is orders of magnitude larger. This isn't much of a concern for me, because my city is covered enough (and I wouldn't mind having to walk 20-30 minutes to find the nearest Exchange ATM anyway).
posted by wo at 12:44 PM on December 14, 2010

I tried to switch to a credit union, and they refused to offer me a chequing account or an ATM card.
posted by Jairus at 12:51 PM on December 14, 2010

My experience with credit unions here in Ontario is that they're very technically backward compared to the banks. Only four or five credit unions in the province provide Interac money transfers, and often the list of online bill pay companies is very limited.
posted by clicking the 'Post Comment' button at 1:14 PM on December 14, 2010

I think people who are interested in lower banking fees would just get an account from PC financial: No fees and you can make free use of CIBC's network of ATMs as well as the Interac network for debit purchases.
posted by any portmanteau in a storm at 1:16 PM on December 14, 2010

Also, the Canadian banks are run out of Toronto. Maybe the banks seem more local than they do in other parts.
posted by dobie at 1:30 PM on December 14, 2010

I use a Credit Union for my union and a bank personally. Credit Unions are friendly and very backwards, for exampe I sit down to do simple deposits with them, after driving almost an hour to the closest branch. I don't have that kind of time in my personal life (and barely in the union) so I use PC financial myself.
posted by saucysault at 1:44 PM on December 14, 2010

I've attempted to open accounts at three credit unions recommended by a local ethical investment adviser; one refused my business, and the other two didn't return my calls and e-mails. I briefly managed to have an account with VanCity's Citizen's Bank — and they were the best banking experience I ever had — but they decided to close their banking service.
posted by scruss at 4:06 PM on December 14, 2010

I live in British Columbia, but I use the Royal Bank. The local credit union, Coast Capital, is too much like Smurf Village. They're just not sophisticated, and have made many many mistakes during my time (25 years) with them. Royal Bank just has better service.
posted by KokuRyu at 4:56 PM on December 14, 2010

I've had a great experience for the past five years with Coast Capital (in BC). All of my family members have the "no fee" chequing account and it's exactly that - no fees for debit card transactions, deposits or payments with no minimum balance required. They're not behind the times from my point of view. I signed up for the account online and use online banking all the time, and I can transfer money to other members instantly for free.

As far as deposit insurance, the CDIC (for bank deposits) has a $100,00 limit and doesn't insure US dollar accounts. The CUDIC (for credit unions) does not have any limit and simply states that all money on deposit is 100% guaranteed.
posted by nelvana at 6:33 PM on December 14, 2010

Response by poster: Thanks everyone. It seems like they are hit or miss (smaller = more likely to be flakey?). Given that Meridian is the 4th largest in the country, I'll assume they are competent, and judging from the website they look modern, so I think I'll give them a shot.
posted by wo at 6:45 PM on December 14, 2010

FWIW, my experience with Coast Capital has been the exact opposite of KokoRyu's. I signed up in 2008, though. Everything from the website to fees to interest to service has been far, far better than any experience with any bank.

My perception might be slightly distorted by the fact that a) I have no debt, and; b) the last two major banks I've used are the execrable Bank of America and CIBC.
posted by klanawa at 8:59 PM on December 14, 2010

With regards to banking at Credit Unions vs. the Rest of the Banks in Canada, I always say that "..I bank at a place that doesn't post a billion dollars of profit a quarter."

YMMV.
posted by sleslie at 9:35 PM on December 14, 2010