Credit unions offer a good alternative to the banks, but along with fewer fees are fewer branches and ATMs.
It`s your money, so why does it seem to cost so much every time you touch it, move it or invest it?
Many consumers are asking that question, and transaction fee fatigue is prompting them to join the more than 1.7 million people in the province who use credit union to bank, get loans and mortgages, and other financial services. Credit unions have been serving Canadians for more than 100 years —Ontario’s first one was founded in Ottawa in 1908. Carefully regulated, credit unions combine the attentive service of a cooperative with the financial safeguards of the Canadian banking system. Credit unions offer fewer branches and ATMS, and overall service that might or might not be better than a big bank’s. But many people are giving them a look; here are some of the reasons.
1. Competitive rates
Credit unions typically have low lending rates and pay higher deposit interest. They are owned by members, not shareholders, so they can shave off costs and pass savings along. For example, Meridian Credit Union, the largest group in Ontario with 44 branches and eight commercial business centres, offers a “better than market rate” against any other financial institution on a five-year fixed-rate mortgage.
2 Fewer fees
While a credit union needs to make a profit to be sustainable, it can afford to give its members a break on such things as transaction fees and other account service charges that can really add up credit card options and chequing or savings accounts. “Some credit unions offer lower fees because their members don’t expect them to make large profits or large investments in infrastructure. Others use these types of subsidies to expand services,” said Kimberley Ney, senior vice-president of marketing and corporate social responsibility for credit union Alterna Savings. “It really depends on what is important to the collective.”
3. On your side
Run by the members through a board of directors, a credit union doesn’t have to answer to corporate shareholders. Members of the credit union (you must buy a share which can cost from $25 to $150 when you open an account) may earn a dividend. Each member can vote and participate in decisions such as charitable donations. In a new Forrester Research study, credit unions had the highest customer advocacy ratings — a belief by customers that their interest is served before profits. Four of the five chartered banks received below-average scores.
4 Keep the profits in your community
Credit unions across Canada donated $37.5 million to charitable causes in their own areas last year. The credit unions make the point that many of the options such as scholarships can directly benefit local families
5. Support business start-up dreams When you have a business idea but no capital to get started, it is almost impossible to get credit from major lenders. Alterna Credit Union’s Community Micro-loan Program has been bridging that gap for more than 10 years. A recent study by Carleton University’s Carleton Centre for Community Innovation pointed out that 60 per cent of the potential entrepreneurs who applied to Alterna had been turned down for loans by at least one other banking institution. But the program has been successful with a repayment rate of more than 90 per cent. The program also has long-lasting benefits for the community. “It goes beyond writing the cheques,” said Susan Henry, manager of corporate social responsibility at Alterna. “We do business development training and life skills as well. There is a lot of support.”
6. Small Business Heroes
Fees and financing costs can make a dent in a small business bottom line. A recent survey by the Canadian Federation of Independent Business (CFIB) gave credit unions top marks in these categories from more than 12,000 small business owners (running companies with less than 50 employees).
7. Convenient locations The big banks still have the most branches, but with close to 500 credit union branches in Ontario credit unions are still a major presence. In smaller towns the credit union sometimes may be the only financial institution. To locate a branch go tohttp://locator.cucentral.com/
Credit Union members have access to free ATM transactions through The Exchange Network, To find a banking machine one near you, go to www.the-exchange.ca .
8. Tailor-made services Credit unions reflect the members’ collective personality. In 2009, the Creative Arts Savings and Credit Union was formed by a group of Canadian actors to provide banking services geared to people in an industry where paycheques are not as regular as for those with a steady office job. Some credit unions offer special language services. The Finnish Credit Union features a Finnish-English website and office staff who are of Finnish heritage. DUCA was started in 1954 by the Dutch community and now has 12 branches with 35,000 members in Southern Ontario.
9. Services. Credit union users are members of the organization. In its best-banking awards study, research firm Synovate ranked credit unions first for branch service and overall excellence. They also tied for first for telephone banking and financial planning.
Some of the most popular consumer banking services, such as no-fee chequing accounts, ATMs, internet banking, debit cards and cheque imaging, were initiated by credit unions.
Ontario credit unions claim to be more friendly and flexible to small buisiness. “We meet with each small business owner and determine what products and services they most need and create a banking package accordingly,” said Scott Windsor, vice-president of communications at Meridian, one of the largest credit unions in Ontario. “Some small business may have high transactions volume, so we would create a package with free/low transaction fees, but a higher loan rate. It’s about finding the services that are right for them.”