COLUMN: Ask the Money Lady – Credit unions vs. banks

Hey there, time traveller!
This article was published 11/02/2024 (445 days ago), so information in it may no longer be current.

Dear Christine,

I have asked my bank (BMO) about consolidating my mortgage and my line of credit. They said it would be prime plus six percent interest. That seems way too high, don’t you think? What can I do now? I’ve been with the bank for 20+ years and now it seems like it’s only their way or the highway mentality and that disturbs me as a consumer that we don’t know or have enough rights to push back. What’s your thoughts? Thanks, Dave

Hello Dave, thank you for your question and yes I do think that rate offer is too high!

Let me ask you a question: Have you ever considered a credit union instead of one of the big-five banks, (BMO, RBC, BNS, CIBC, TD)? I ask you this because I recently had a conversation with Brent Budz, the CEO of Stride Credit Union and asked him what makes credit unions better than the big banks? “The credit union culture is very different.” says Brent. “We encourage Canadians to get to know their local credit union and give them a second look. Unlike being a shareholder with the big banks, here you become a member with us, and that gives you a say and a vote on the basic direction that the credit union may take. Our competitive advantage over the big banks is that we build long lasting relationships with our members to find viable solutions not just fulfilling transactions.”

I like the philosophy of the Canadian credit unions. They definitely seem to have exemplary customer service and a true desire to want to “think outside the box” for their members. Credit unions in Canada are non-profit financial institutions, while the big banks work on a for-profit model. Really, banks and credit unions offer the same products and services, however credit unions are member owned, run by a local and democratically elected board of directors, and any surplus is directly reinvested back into the local economy. “Historically, credit unions formed as a result of a common bond, such as employment or geographic location. Because of this focus, credit unions are heavily invested in the local culture and economy. This is where credit unions win out over the banks since those that belong to it, whether as an employee or as a member, are local. We understand the local situation.” says, Brent.

Dave, I encourage you to consider your local credit union and let them tell you why they’re different. It’s always a good idea to check out the competition and mix it up a little, especially at the start of a new year. With the economic environment now, we need all the help we can get – and if it comes with more value and better customer service, why not?

Christine Ibbotson is a Canadian finance writer, radio host & YouTuber. For more advice check out her YouTube channel: ASK THE MONEY LADY – Your Canadian Finance Coach.